Visa (V) was the biggest IPO in US history when it began trading back in March. On April 3rd I highlighted the breakout and initiated my first position in the company after it broke out of a very bullish looking triangle formation.
http://selfinvestors.com/si/visabreakoutLess than one month later, after vaulting more than $20 bucks, I decided to lock in my profits. Way over hyped, way overbought. At 9:09AM on April 3rd I sent the following to my Gold & Platinum members:
(04/30/08 9:08:58 AM): Ok, I'm going to go ahead and take profits in Visa (V). Lots of giddy people out there with big Visa profits, but this is a stock that is WAY overbought. Considering we are still in a bear market and I'm up 30% in just a couple weeks, I'll take the gift and sit tight for awhile. I really believe I can get back in at a significantly lower price, particularly when the lock up period expires and this market pulls back. If you're a long term holder with a multi year time horizon it probably makes sense to ride it out. I am not. I trade based on current market conditions and the
action in individual stocks over a shorter time period. I'm avoiding the greed in Visa and out at 83.67 as it breaks the bullish formation on the 5 min intraday chart.
As it turns out, the stock ramped up another 6 bucks or so before the run died and it spent the next two months carving out a large, bullish wedge formation. One day before the holiday, on July 3rd it broke that bullish formation setting it up for a much larger cup base which it is forming now.
I haven't had time to analyze the earnings reports of both Visa and Mastercard (MA) but I know how the market reacted. Despite beating EPS estimates, both were hit hard on heavy volume setting both up for a deeper correction. These companies are absolutely not immune to a faltering economy and until the deceleration of growth in both earnings and revenues for both companies stabilize, it pays to watch on the sidelines and wait for the next base to form.
Disclosure: None
