Visa - Here Is the Game Plan for the Stock

Visa is the middle of its recent trading range after the company announced a revenue reduction. Here's the game plan for the stock.
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Market volatility remains high, but Visa  (V) - Get Report stock is surprisingly resilient on Tuesday.

Shares were down 1% despite the company announcing that its second-quarter revenue will be impacted by the coronavirus. Specifically, management expects a 2.5% to 3.5% impact to its revenue this quarter. It gets worse, though.

The company stated that “trends through Feb. 28, 2020 do not yet fully reflect the impact of the coronavirus spreading outside of Asia. As such, we anticipate that this deteriorating trend has not bottomed out yet."

As a result, Visa couldn't issue an outlook for the full year, but does plan to provide investors with an update when it reports earnings in April.

A reduction in sales, management saying the bottom is not yet in, and adding uncertainty to the mix is the cocktail that usually equates to selling. And yet, while the overall market is under pressure on Tuesday despite an emergency rate cut by the Fed, Visa stock is barely lower.

Let’s look at the charts.

Trading Visa Stock

Daily chart of Visa stock.

Daily chart of Visa stock.

On Tuesday, Target  (TGT) - Get Report reported a mixed quarter and to no surprise had a mixed reaction in its stock price. However, it gave investors a very well-defined setup. Visa stock is in a similar situation.

The only difference between the two is Visa gave us bad news, whereas Target’s news was only mixed. If investors are looking for a positive with Visa, it may be that revenue is only expected to take a ~3% hit from the coronavirus. Still, I thought the news would have a worse impact than it is having, particularly on a down day in the broader market.

As it stands, Visa stock is sitting right on its 100-day moving average. Above that and Tuesday’s high near $194 and a retest of the 50-day moving average and $200 level is in the cards. If Visa can reclaim this area, it puts $205 to $210 on the table. If instead the $200 level and 50-day moving average act as resistance, a retest of the 100-day moving average is possible.

Should shares move lower rather than higher, look for a retest of the 200-day moving average and $180 level. If they fail as support, the recent lows near $173 is on the table.

So what’s an investor to do?

Simply put, Visa stock has a wicked range over the past few weeks, ranging from $173 to almost $215. Sitting near the middle of it now there’s no telling which way it will go.

But that’s why we must keep it simple and go level to level. In this case, below the 100-day moving average puts the 200-day moving average on the table. Above the 100-day puts the 50-day moving average in play. Once we are at one of those measures, we’ll need to see if shares will continue on toward the end ranges or reverse.