Relative strength in V, MA, PYPL, and SQ, is consistent as credit card purchases rise consistently throughout the financial meltdown these past few weeks. Mastercard, Paypal, and Square are highlighted herein.
Households needed to buy much-needed items (XLP) at the onset of the COVID crisis and lately, we’ve seen an uptick in discretionary spending (XLY). This increase in credit card spending is showing up in earnings for the big credit card processors.
Credit Card Payment Processors
Mastercard is my favorite as the stock traces out the right side of a big cup. As Phase II unfolds and markup continues, price action will move above the large Volume by Price (VBP) resistance zone (left margin). In addition, and more importantly, price action is above both the 9ema and 21d. The 200d is in the rearview mirror. All three, as well as VBP, are now supporting price.
Volume is picking up showing institutions are active. MACD is above its signal line and bullish. RSI is above 50 and rising.
Buy on pullbacks or flags.
VISA (V) looks very similar, with the exception of being above VBP.
Use VISA (V) as a benchmark, as we want all of these stocks to move together during this Phase II “markup” cycle.
Square (SQ) has a bit of supply at this level. If it clears (VBP) in this 80 (+/-) zone, the stock could see fresh 52-week highs. The volume is noteworthy.
Paypal (PYPL) has surpassed expectations.
Paypal’s (PYPL) stock gapped on earnings projections and remains firmly above February’s peak. Earnings are steady and growing. IBD data on the right side of the table are strong.
With futures ping-pong action above 2900 “gamma” support and 2970 ceiling, we continue to look for more calls being bought. Watch the put/call ratio and open interest as we look forward to 3000 as the pin for JUNE options expiration in light of the data that came out recently highlighting large retail “long call” activity.
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Vinny
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