Publish date:

Visa and MasterCard: Where to Buy the Dips Ahead of Q4

Visa and MasterCard have been excellent long-term holdings for investors. Here are the dips to buy.

Should investors be buying credit-card stocks? Amid the resurgence of the Covid-19 delta variant, there is plenty of uncertainty.

There’s uncertainty in our schools, in the market and in everyday life. It’s been an interesting although rather unfortunate 18-month stretch. That said, it could have been much, much worse.

The stock market’s performance has helped ease some of that pain — at least from an investor’s perspective. With the economy holding up pretty well, it should bode well for Visa  (V) - Get Visa Inc. Class A Report and MasterCard  (MA) - Get Mastercard Inc. (MA) Report, too.

That’s especially true as we enter the final three-and-a-half months of the year. Back-to-school shopping and summer traveling are already in the books. But now we have the holidays to hold our attention.

Let’s look at the charts.

MasterCard is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MA? Learn more now.

Trading Visa Stock

Daily chart of Visa stock.

Daily chart of Visa stock.

Visa roared into the third quarter near its highs and kept on chugging, hitting an all-time high on July 27. Since then we’ve seen a steady yet measured pullback.

The stock dropped to its 200-day moving average last week and has bounced nicely since. But Visa is having trouble pushing through the 10-day moving average and downtrend resistance.

Should it turn lower once again, we may get a retest of the 200-day moving average and potentially a break down to the $220 level. For now, those are buying opportunities, although Visa’s first test of the 200-day was admittedly the better opportunity.

Should $220 fail as support, investors must be prepared for a potentially larger decline.

TheStreet Recommends

Specifically, I would love a test of the 21-month moving average, which has historically been solid support.

On the upside, look to see if Visa can clear the 10-day moving average and downtrend resistance. 

That will put the $230 level and the 21-day moving average in play, followed by a potentially larger push up to the 50-day moving average.

Back above its moving averages and $250-plus is possible again.

Trading MasterCard Stock

Daily chart of MasterCard stock.

Daily chart of MasterCard stock.

While Visa topped in late July and is down about 10% from the highs, MasterCard topped in late April and is down about 12.5%.

In this case, MasterCard is below its 200-day moving average, but back above its 10-day moving average. From here, I want to see if the stock can reclaim $355.

If it can, the 200-day moving average isn’t far off, near $360. Above that and the 50-day moving average is on the table, followed by the 61.8% retracement near $375.

Things get interesting, though, if MasterCard can’t reclaim $355. A loss of the 10-day moving average would put the recent low back on the table near $339.

Just like Visa, MasterCard would be vulnerable to a test of the 21-month moving average should it fail to hold this month’s low.

In reality, a test of this moving average would be a great buying opportunity in both stocks. Over the long term, they have been massive winners and I don't expect that to change.