Credit Cards Breakdown Imminent? (by MoneyMiser21)

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The relentless march higher for credit card heavyweights Visa and MasterCard may be over (and take American Express with it), should PayPal prove to be the canary in the credit coal mine.

Why? Their charts look eerily similar, with Paypal potentially being the leader.

First, the favorite payment method for millenials. PayPal’s (PYPL) stock chart completed and broke down from a (ten gallon hat variety) head and shoulders topping pattern already.

Now let’s look at PayPal’s physical credit card competitors.

First MasterCard (MA). Yes that right shoulder did not dip beneath the left like PayPal’s did. Still, you can agree there’s the potential for a head and shoulders pattern to form.

Visa’s chart (V) looks just slightly different than MasterCard’s, with that potential left shoulder’s top above the potential right shoulder’s top.

Finally we have American Express (AXP). Its chart is still in the process of forming a potential right shoulder. Should that pattern form, Amex’s right shoulder low slumped beneath the potential left shoulder’s low, which is a would be an edge in the bears’ favor.

So what’s driving this? In a word, Treasuries.

The most recent bull impulse leg in treasury bonds topped out in late August. Since then, we’ve seen ‘something’ cause a retracement (whether it was rebalancing by large funds or other reasons).

Note how the timing of the bonds top — then correction, coincided nearly exactly with price action in Mastercard, Visa, and American Express.

You know, because interest rates kinda have a BIG impact on revolving debt.

Time will tell if the payment choice of the new generation becomes the leader going forward for the legacy leaders.