V

[Ramsburg]

Profile:
Visa Inc. is a retail electronic payments network. The Company facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Its primary customers are financial institutions, for which it provides processing services and payment product platforms, including platforms for consumer credit, debit, prepaid and commercial payments. The Company has three business operations: transaction processing services, product platforms and payments network management. In October 2007, the Company completed the series of transactions, in which Visa U.S.A., Visa International, Visa Canada and Inovant became direct or indirect subsidiaries of Visa Inc. Visa Europe did not become a subsidiary of Visa Inc., but rather remained owned and governed by its European member financial institutions and entered into a set of contractual arrangements with the Company in connection with the reorganization
Market Cap: $92.2B
Sector: Financial
Website: www.corporate.visa.com


Trading Idea:

Technical Analysis:
V is a recent IPO that out of the gate has been trading in a nice ascending channel.  Technically it is both within striking distance of all time high breakout and nearby ascending support. As a new issue its overall trading pattern is still in infancy, but enough is there to provide a safe entry in a nicely ascending pattern.

Fundamentals:
V needs no introduction; we all probably have one of their cards in our wallets. Although in the financial sector this in no way has subprime dirt hidden away, it is a transaction machine and the global leader. Profit is strong and on the rise. The world is increasingly a cashless society and VISA is the leader to drive and capitalize on this fact.

V announce first results since IPO http://online.wsj.com/article/SB120941505595550569.html?mod=googlenews_wsj

Financially VISA is super strong and rated in the top brackets by S&P http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080520&id=8671578

Our position in V is gated on market leadership, growth potential, supreme financials, combined with emerging technicals that provide a good entry point. V is certainly not undervalued; however this in no way will deter growth prospects in the stock.
We will look to introduce a trailing stop in the next trading session.



Trading Plan:
Buy V at or near the open

[AussieTrader]

Update:

Friday's session was quite bloody. A combination of factors; OIL - weekly oil inventories reported by the Energy department dropped 1.5% and a Morgan Stanley analyst predicted oil may hit $150 in weeks. Plus the US employment report showed unemployment up 0.5% to 5.5% in May.  Not many stocks survived the downside impact of these catalysts as oil surged to $139 area. Generally the relationship is oil goes up stocks go down.

V lost 4% or so from the open gapping down and ending near low of the day. Technically not damaging, as the stock remains fully within its ascending pattern and support zone. That said, seeing a stock go down as soon as you enter is obviously psychologically challenging. To keep Friday's loss in perspective, the average true range (ATR) of V based on previous 20 days trading is 3.8%. So a 4% decline on a tough market day should not be a surprise (See Note below). 
In late May V took a dip trip to test the 50EMA (see note on chart) before recovering quickly. I anticipate something similar may well occur over the coming days. We will watch the market action some more before introducing our stop, but the key area is $77 and upwards.

Trading Plan:

HOLD V

Note: A simple overview of ATR; it is the measurement of a stocks volatility (or daily price range from high to low) over a selected sample of days trading (in this case I am using the past 20 days). The calculation will then give you a non directional result showing how much on average the stock can move either up or down on a daily basis.  ATR is a very useful indicator which we will have future focus on when we open the Traders Library.

[AussieTrader]

Update:
Some news today, relating to Discover seeking $6B in damages from Mastercard and Visa in an anti competition lawsuit. I don't think this will have any material impact, but here is a news link

http://www.forbes.com/afxnewslimited/feeds/afx/2008/06/10/afx5098193.html

V indeed set up a possible 2nd dip trip to ascending support zone.  A reactive touch of the 50MA (weighted) finished with a close in the multi touched support resistance zone. We need to be watchful that V hasn't created some double top action, so it is vital that the stock is positively reactive in the $77 and above zone. No stop introduced yet, we will react to the price action in this area.

Trading Plan:

HOLD V

[AussieTrader]

Update:

The current market conditions are dictating that hard stops be introduced on a lot of our positions and I will do that for V today. Technically V didn't hold the weighted 50MA so I have my signal that continued weakness is likely. We have to balance trying to stay in the trade with protecting capital as all traders do. I will use the 50EMA area as a point of no return for this position.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

V was in the thick of yesterdays sell off and is within striking distance of our stop. Nothing to do except hope that we get a positive reaction from this support zone.

Visa announced a quarterly dividend which comes into effect in August, so is really immaterial for current situation. A link to the news is attached.

http://www.earthtimes.org/articles/show/visa-inc-announces-quarterly-dividend-and-sets-annual-meeting-date,430040.shtml

The trading plan remains unchanged.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

I asked for a positive reaction in this support zone and that is exactly what happened. What I am looking for next is a break of the descending resistance (Noted 1 on chart, $81 and above). That would set up a very bullish continuation scenario. Take a look at the SDA chart to see exactly what I am asking for from V.

There is no need to change the trading plan at this stage.

Trading Plan:
HOLD V with a Stop at $76.95

[AussieTrader]

Update:

Technically V has displayed a great bullish scenario. Bouncing off previously identified strong support zone, then breaking through the further identified short term resistance line.
We couldn't ask for much more in terms of setting up the conditions for continuation. If you haven't taken a position in V yet then this might be a great entry opportunity with low risk. That all said, they are only great conditions; there is no guarantee that continuation will occur, but it is now the more likely outcome. I put that caveat in especially today because of what happened to SDA (see SDA link).
The overall market has been surprisingly resilient following the most recent sell off, more so than I expected and V has been part of that strength for sure, how long lived the market strength is right now I am not sure. So we still have to tread carefully and will maintain our current trading plan.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

V was up nicely during the day continuing the bounce from ascending support. Technically it seems to be trading within a channel between mid to upper $70's and just under $90. A breakout from that range is what we are anticipating.

There is nothing new to report from a fundamental perspective. The trading plan remains the same.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

V continues to trade within the identified channel, when it tests the lows of the channel it ends up making higher highs, the top side of the channel is sloping downwards so in essence we have a triangle forming.

Conclusion? Don't be suprised to see a re-test of the lower channel line before a breakout above this channel / triangle occurs.

This is perfectly normal consolidation / sideways action, there is no need to change the current trading plan.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

Update:
Conclusion? Don't be suprised to see a re-test of the lower channel line before a breakout above this channel / triangle occurs.
This is perfectly normal consolidation / sideways action, there is no need to change the current trading plan.

Technically V continues in this previously discussed trading range. Todays downside action was on light volume and resulted in a -3% move. All in all normal consolidation / trading range activity.

An important tool in the traders arsenal is the ability to look at charts in more than 1 timeframe. Forinstance, by using a weekly chart of V I can get a perspective on trend direction whilst being able to filter out the day to day noise and shape of the daily chart. A quick look at todays V chart (represented as weekly candles) will help show why I am confident in the current trend shape of V.

There is nothing new from a fundamental perspective. The trading plan will remain unchanged.

Trading Plan:

HOLD V with a Stop at $76.95

[AussieTrader]

Update:

Technically V continues to trade in the previously discussed pattern. I am positive to the pattern it is creating.

Fundamentally we have a reiteration of a BUY rating from UBS with $100 12 month price target. I attach the UBS analysis in this update (bottom of page). It is very comprehensive and gives a great insight into:

Visa V's Mastercard
Who is Visa
How do they make money
How does a credit card transaction work
Why did Visa go public
Overview on Visa management
Threats, catalysts and opportunities for Visa

A great read for anyone interested in Visa or the credit card industry in general.

The trading plan remains the same.

Trading Plan:
HOLD V with a Stop at $76.95

[AussieTrader]

Update:

Technically V reflected the general market selling, gapping down on the open and closed sitting on the 50EMA. So what happens now depends on the overall market action. Our position in V is gated on it being a world leading, global brand growth company, none of that has changed since we entered. We have a money management stop in place and it will remain there to protect us if our timing and the market are not conducive to the initial trade outcomes.

This morning V announced they will release Fiscal 3rd Quarter earnings on Wednesday 30th July.

The trading plan remains the same.

Trading Plan:
HOLD V with Stop at $76.95

[AussieTrader]

Update:

V had a huge volume day and completely erased Thursdays sell off +4.42% on the day. There was a catalyst for this action in the shape of V being added to the Russell 3000 index as of close of trading Friday.

The Russell 3000 contains the largest 3000 companies in the US based on capitalisation, this represents around 98% of the tradeable US equities market. Because V was added a consequence of this being funds which track indexes have also to re-balance their holdings in line with the change. A look to V's volume on the day shows 22M shares transacted in the final hour of the trading day (50% of the days total). This re-balance occurs once per year.

A couple of links below will take you to the Russell website:

Russell Home - http://www.russell.com/

Index Additions - http://www.russell.com/indexes/membership/Reconstitution/Recon_3000_Additions.asp

Monday may well see more volume increase as a result of the Russell 3000 addition.

No change to the trading plan.

Trading Plan:

HOLD V with Stop at $76.95

[AussieTrader]

Update:

With the current market conditions some of our long positions are in survival mode (regardless of their fundamental position / technical layout). V is no exception and is drifting lower, technically it created a 5 week low bringing our money stop into close proximity.

We entered this position with an intended outcome in mind; that outcome is currently not materializing, primarily as a result of the overall market sentiment. We will maintain our trade plan here, which, on the balance of probability will result in V stopping out.
Now, You may ask, if that is our thought then we should either just sell now right? Or remove the stop and hold V to see what might happen? My answer to that is; that is just my thought I do NOT know what will happen, the market and V may move up from here or continue drifting down. Because I do not really know (and no one does) I have to let my strategy (exit wise) guide me and tell me when to exit.

There are no fundamental or news related items of any significance for V.

Trading plan remains unchanged.

Trade Plan:

HOLD V with STOP at $76.95

[AussieTrader]

Stopped out of V $76.95