Visa Topples Off An All-Time High

Visa Inc. (V),  the operator of a retail electronic payments network (credit cards and more) rose sharply in recent years, and found a particularly steady bid since the summer of 2011.  The prospects of increased consumer spending, credit growth, and an all around improving economy blasted the stock higher to the tune of roughly 165% from June 2011 up to the recent all-time highs in late July 2013.  As such, the stock continually showed leadership in a tape that, though resilient, did throw a few scares at investors over the past couple of years.

On July 31st however, the stock dropped 7.50% on the day on the back of a new court ruling which essentially could mean that Visa Inc. (V)will have to charge its retailers smaller debit-card fees.  Interestingly, the reaction to the stock prices of both Mastarcard Inc (MA) and American Express (AXP) however was much less muted.

In terms of price action for Visa Inc. (V), which is what I am concerned with, Wednesday’s drop in the stock, albeit sharp, only took it down to the 100 day simple moving average, which acted as solid support through the entire stampede since June 2011.  Through that lens the stock’s drop has thus far simply been a mean-reversion move.  On the other hand, the one-day sell-off also snapped the stock’s two year up-trend with ease, and that is something worth monitoring.

visa multi year

While the stock did rebound yesterday, Thursday August 1st, I want to keep a close eye on Visa Inc. (V) as any follow-through weakness on the back of Wednesday’s slide may qualify the stock as a market leader fumbling the ball.  In other words, and to keep this short and sweet, as the broader market continues its ascent and chasing the market higher becomes increasingly challenging, Visa Inc. (V) is a stock to keep on the radar for potential leading indicator characteristics on the downside, if and when.

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