When the broader market experiences a sudden decline, I’ve learned to focus on stocks that are holding up as conditions appear to deteriorate around them. With this week’s post-Fed drop, I’m immediately drawn to stocks like Visa (V) which remain in primary uptrends and improving relative strength. Let’s focus first on how Visa has performed relative to its peers. Here we are showing Visa on a daily basis, the relative performance versus the S & P 500, and also Visa compared to the financial sector. Both of the relative lines have made new three-month highs this week, demonstrating that V has outperformed both its sector as well as the broader market in Q4. In the top panel, we can see that Visa is currently trending higher above two upward-sloping moving averages, a configuration that is only featured on about 20% of the S & P 500 member charts this week. V certainly seems to be demonstrating signs of strength while many individual stocks are showing clear signs of weakness. Looking at the longer time frame, we can see a weekly uptrend that really started off the October 2022 low. Pullbacks in late 2023 and mid-2024 pulled the price down to the 40-week moving average. In both instances, we saw the weekly RSI bottom out around the 40 level, followed soon after by a PPO buy signal. So while Visa has certainly demonstrated short-term strength on the daily chart, the weekly chart shows that this is a long-term growth story resuming its long-term uptrend. While we’ll keep a watchful eye on the weekly PPO indicator for a potential sell signal, for now this is a chart in a confirmed long-term uptrend phase. Back to the daily time frame, let’s review some specific levels to watch in the days and weeks to come. In early November, Visa completed a cup-and-handle pattern with the breakout above $290 providing the final confirmation. We then saw a post-election gap higher, pushing V above $300 for the first time. From there, we’ve observed a continued uptrend in price but on weaker price momentum. The RSI has been sloping downwards since early November, creating a bearish divergence between price and RSI. Given this short-term bearish signal, we’re watching the recent price gap range around $296 to $302 as a potential downside target if we do see a pullback emerge. A move down toward this range would also bring Visa down to its upward-sloping 50-day moving average, which often serves as short-term support within a long-term uptrend. Given the strength in the weekly chart, as well as the improving relative strength conditions, we’ll assume that any pullback is likely a short-lived scenario. If the S & P 500 and Nasdaq 100 face further declines after this week’s downside shock, investors could weather the storm with greater success by focusing on stocks and groups demonstrating strong relative strength trends. For now, Visa seems to be providing plenty of signals suggesting a decent safe haven during a period of ongoing market uncertainty. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (NONE) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
