Visa Sits on Key Support After Earnings Fall
Shares of Visa (V) were slipping 3.3% in Friday’s trading session but it's a surprisingly shallow dip considering that the company’s fiscal first-quarter earnings of $1.46 a share missed estimates by a penny and as revenue of $6.05 billion missed expectations by $30 million.
It’s not a large miss on either metric, while year-over-year sales growth hit 10%. However, to see shares only down about 3% is quite surprising, given the 1.5% decline in the S&P 500 on Friday and after such a big run in Visa’s stock price over the past few weeks.
In that light, Visa’s price action is actually pretty impressive given the overall breadth in the market. How long will that remain the case though? Let’s look at the charts and see the important levels.
Trading Visa Stock
Daily chart of Visa stock.
Chart courtesy of Stockcharts.com
After breaking out over $185 in mid-December, Visa stock slowly but surely took flight, grinding up toward $190. Once 2020 came around though, shares really took off, bursting from $190 to $210 in just a few weeks, causing the stock to become quite overbought (blue circle).
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Following that move, $200 has shown to be support, while the 20-day moving average is stepping up as support on the post-earnings pullback as well. This will be a very key area to watch.
Confident bulls may even take a long position here, with a stop-loss below Monday’s low of $199.10. However, others will hold off amid the increasing volatility in the market.
Visa will need to go one of two ways. Either support near $200 will hold and shares will rally back to short-term resistance at $208, or support will break and trigger a larger decline.
If it’s the former, see how Visa handles $208. If it’s still resistance, it keeps the 20-day moving average and $200 level in play. Above $208 and the $210.13 high is in sight, with more gains possible.
If instead support gives way, look to see if uptrend support (blue line) buoys the name, along with the rising 50-day moving average. If the markets really start to swoon, Visa stock may find itself sinking lower and possibly retesting the $185 breakout level. It may not get that low, but if it does, it could present a solid buying opportunity for long-term investors as Visa stock will be down almost 12% from the recent high.
