• A Quick Glance at Four Outperforming Credit Services Names

    by  • October 31, 2012 8:11 am • Charts to Watch • 0 Comments

    With the S&P 500 Index up 12% year-to-date, there are several names in the financial sector that have outperformed the market so far this year. More specifically, these names fall into the credit services industry—and you are probably familiar with all of them. Credit services companies Discover (DFS), Mastercard (MA), Visa (V), and Capital One Financial (COF) have all posted strong year-to-date gains, and have some very solid looking charts.

    Beginning with Discover (DFS) you can see below that the chart on the weekly timeframe is in a solid uptrend. It should be noted that all charts and performance numbers are as of the close on Friday, October 26th. DFS is posting a year-to-date gain of nearly 70%.

    (chart courtesy of StockCharts.com)

    Featured below is another company in this industry— Mastercard (MA). The equity is up 22% year-to-date and is one of the more popular credit services names. MA has been a solid trending equity as the weekly chart shows it trading well above its 200-week moving average (red line).

    (chart courtesy of StockCharts.com)

    Visa (V) and Capital One Financial (COF) are up 37% year-to-date and 42% year-to-date, respectively. These are two names that I like for longer-term buys. On the weekly timeframe, both of these equities have shown positive price action.

    (chart courtesy of StockCharts.com)

    Despite the strong performances from both of these well-known companies, short interest has actually increased over the past 3 months. Option activity has seen a lot of bearish bets towards COF in particular. The Schaeffer’s put/call open interest ratio (SOIR) is a measure of put and call open interest for the front three months of an optionable equity. The SOIR for COF currently stands at 1.17. Visa has seen bearish bets as well—its SOIR is 1.10.

    (chart courtesy of StockCharts.com)

    Here at Schaeffer’s, we love finding higher trending equities that continue to climb in the face of negative sentiment. We believe that this set of circumstances can have strong bullish implications. Positive price action that continues to prevail, in spite of the many skeptics out there, can lead to profitable opportunities.


    Peter Bryans joined the Schaeffer's Investment Research trading team as a Trader in April, 2012. A graduate of the Fisher College of Business at The Ohio State University -- where he concentrated in Finance -- Peter previously held internships with an insurance broker and a wealth-management firm. In his current role, Peter trades a variety of our real-time option services and also hosts our "Options Apprentice" weekly webinar presentations.


    Leave a Reply