Below is a weekly chart of Visa, Inc. (V) which gives you an idea of the potential macro-set-up we are looking at here. You can see that the current action may be the peak of a possible second right shoulder within an overal head and shoulders topping formation following the huge rally V had off the market lows of March 2009. Keep in mind this is just the theoretical basis for the short-sale trade in V here, and one will not know the precise downside target areas until the extent of the market's correction is clear here, assuming it corrects at all! If it does, we would try and synchronize a short in V with the general market, monitoring a real-time chart of the indexes for possible undercut & rally areas. We will have more on any price targets IF, and we emphasize IF this works on the short side. So far, V has held in the green most of the day today at 10:52 Pacific Time, but we would watch for weakness into the close if the general market also softens.
Keep in mind also that we fully advocate short-selling in the event of a short-term to intermediate-term market correction, which tends to be "tactical" in nature, seeking to hit a closer downside price target, but if the market's trend decides to continue further, these can then become "strategic" in that we may attempt to campaign a longer-term downside move. For now, this is the set-up, and we use yesterday's high as our max stop on any short position in V, got it?
And for you looky loo's out there, yes, we have a position. For us, it is a "probe," but to you it might be a massive position - who knows? ;-)
