Visa Heads Into the New Year Near a Major Market Cap

V's market cap exceeded the $4 billion mark during Christmas week

Dec 31, 2019 at 9:38 AM
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It's been an outstanding year for Apple (AAPL), which entered 2019 nursing the proverbial wounds of a bruising sell-off in the fourth quarter of 2018 that sent the tech giant's market cap back below the trillion-dollar level. The stock has spent the past 12 months sprinting higher, and is not only set to end the calendar year boasting the title of "Best Dow Stock of 2019," but has also rejoined fellow tech titan Microsoft (MSFT) in the trillion-dollar club. However, the chart we're looking at this week isn't of these two tech giants, both of which have been widely tracked by Wall Street over the course of the past 12 months, but another blue chip that is holding near a round-number market cap -- credit card concern Visa Inc (NYSE:V), whose market cap arrived just above the $4 billion mark during Christmas week.

Taking a closer look at Visa's impressive run up the charts: the stock entered 2019 with a market cap at $286.22 billion, compared to $748.53 billion for Apple and $779.67 billion for Microsoft. At the close this past Thursday, Dec. 26, the credit card company's market cap was docked at $408.08 billion -- a 43%, or $121.86 billion, year-to-date increase. For the sake of comparison, two members of the FAANG contingent -- (AMZN) and Alphabet (GOOGL) -- have seen their market caps rise by a mere 26% and 30%, respectively, over the course of the calendar year.

Visa's notable rise in market capitalization comes amid a 43.5% rise in the stock price since its Dec. 31 close at $131.94. This $132 level is significant in its own right, as it was home to V's 20-month moving average at this time last year -- a trendline that has cushioned all pullbacks for the Dow stock between 2014 and 2016 -- and represents two times the security's 2014 close. The shares bounced sharply off this long-term level of support at the start of 2019, before briefly stalling near their 120-day moving average in late January. This trendline was overtaken in early February, and this former layer of resistance has since ushered V shares higher -- and emerged as a steady layer of support early in the fourth quarter of this year.

Other technical levels to watch on Visa heading into the new year are $186 -- home to the stock's September peak, and a price point overtaken as the equity powered to new highs in the second half of December -- as well as $189.88, site of V's new record intraday high, tagged on Dec. 27. The shares eventually lost steam throughout that session to settle just below here, at $189.39.

This area is one of particular interest to options traders, considering peak open interest on Visa is found at the January 2020 190-strike call, with nearly 25,000 contracts outstanding. Data from Trade-Alert indicates the bulk of these positions were built over the last two months, as V was extending a late-October bounce off its 120-day trendline, and making its way to record highs. This heavy accumulation of call open interest could point to a period of choppy price action in the new year, as those who sold the calls have a vested interest in Visa shares remaining below the 190 strike -- and could create resistance by adding selling pressure as the stock approaches the $190 level.

v daily chart dec 27

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, December 29.


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