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Asset Watch

Will Visa bounce off its October 2020 lows?

 

Wednesday September 28 2022, 12:10pm GMT

With the fall weather coinciding with a fall in asset prices, weak September seasonality remains a thorn in the bulls’ side. However, with oversold conditions poised to elicit a bounce at some point, could Visa be a solid bet when October arrives?

 

On Sep. 8, Visa noted that its “U.S. Spending Momentum Index (SMI) rose to 96.3 in August (seasonally adjusted), a 1.3-point improvement from July […] on a regional basis, spending momentum rose across all four regions of the country.”

Source: TradingView

Similarly, Mastercard released its SpendingPulse U.S. retail sales report on Sep. 12, sharing that “U.S. retail sales excluding automotive in August [were] up +11.7% year over year and +20.4% compared to 2019.”

 

As Americans continue to swipe their debit and credit cards, results are fundamentally bullish for Visa. While sentiment remains depressed, Visa closed the Sep. 23 session less than $5 from its October 2020 lows. As a result, with seasonality poised to turn bullish in the coming weeks, we may be near a medium-term low.

 

Visa’s daily RSI ended the Sep. 23 session at 25.25 — the third lowest reading since July 2019, meaning the stock is materially oversold. When Visa’s daily RSI hit 23.48 and 23.84 in March 2022 and October 2020, the bottom was in, and sharp rallies followed.

 

So, is Visa near an inflexion point, or is something more sinister on the horizon?

 

Sources:

Visa and Mastercard consumer spending reports:

https://usa.visa.com/partner-with-us/visa-consulting-analytics/spending-momentum-index.html

https://www.mastercard.com/news/press/2022/september/mastercard-spendingpulse-u-s-retail-sales-expected-to-grow-7-1-this-holiday-season/

 

S&P 500 seasonality

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