The credit crisis that has taken down banks, brokerage firms, insurance companies and other financial institutions is reaching into purses and wallets.

  • After peaking last September, credit card companies are now feeling the full brunt of the credit crunch as share prices have fallen to less than half to three-fourths of what they were just four months ago.
  • Capital One appeared to be weathering the storm during the holiday shopping season, but with payments on cards now due, Capital One lost half of its value in just the last few weeks, dropping to 15 after a peak above 60 last September – and 90 a few years ago.
  • VantagePoint’s medium-term moving average crossover caught the beginning of Capital One’s latest skid in January (red circle on chart), supported by a bearish 0.00 reading for the predicted neural index (green line).
  • American Express isn’t faring much better, also dropping to 15.
  • With higher default rates on card payments and consumers scaling back their spending and becoming more sensitive to debt, the credit card business may have lost its attractiveness to investors.

Source: VantagePoint Intermarket Analysis Software

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