Dow Stock Sending Up Short-Term Bullish Signals

Visa stock tends to outperform after lengthy Dow losing streaks

Jun 21, 2018 at 1:48 PM
facebook twitter linkedin


The shares of Visa Inc (NYSE:V) are lower today, likely due to broad-market headwinds. However, the credit card concern notched a new record high just yesterday -- and the stock just flashed a bullish options signal, to boot. What's more, Visa stock has historically been the best blue chip to own after a lengthy Dow losing streak.

V stock has more than doubled since its February 2016 lows. The shares have added roughly 18% in 2018 so far, with pullbacks contained by their 120-day moving average, and after a period of consolidation beneath the $125-$126 level, broke north of this region in early May. As alluded to earlier, Visa stock has been exploring all-time highs recently, topping out at $136.69 yesterday. At last check, the equity was down 0.7% to trade at $134.51.

visa stock chart june 21

Despite the blue chip's upward momentum, near-term options remain attractively priced. Visa sports a Schaeffer's Volatility Index (SVI) of 16.8% -- in the bottom 20% of its annual range, suggesting short-term options are pricing in relatively low volatility expectations during the past year.

Since 2008, there have been just four other times at which V stock was flirting with new highs while simultaneously sporting an SVI in the bottom 20% of its 12-month range. A month after those instances, Visa shares were higher 100% of the time, averaging a gain of 3.81%, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

Even more intriguing, perhaps -- V stock has outperformed after Dow losing streaks of at least six days. Since 2010, there have been 13 of these instances -- not including the current losing streak, which is set to extend to eight days today. A month after these dismal DJI stretches, V shares averaged a gain of 5.04% -- the best of all Dow components.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners