Yesterday it was AT&T (T) – Get report from AT&T Inc; today it is Verizon (vz) – Get report from Verizon Communications Inc.
Shares of the country’s two largest telecom companies are unusually volatile as they announce their second-quarter earnings.
On Thursday, Verizon shares fell 2.9% on AT&T’s earnings sell-off. While AT&T beat earnings expectations, its full-year free cash flow guidance disappointed investors after being cut to $14 billion from $16 billion.
This morning, Verizon also delivered its own disappointment. Shares are down more than 7% from the report as earnings missed expectations and the company cut its earnings outlook.
For what it’s worth, Verizon stock fell 1.5% on Monday and 2.75% on Wednesday. Now, Verizon stock is down for the fourth time in the last five days, down about 14% this week — double its worst weekly performance since March 2020.
This will also mark the stock’s biggest one-week drop since October 2008.
But don’t worry bulls: support may not be too far away.
Trading Verizon Stock
Verizon stock this morning looked like it might represent an opportunity, especially if it had opened below the $45.55 level. That’s been the May low and the 2022 low so far this year.
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Had Verizon stock broken below this level, or opened below this level and reclaimed it, the bulls could go long with risk appropriate.
Instead, it went further down.
On the plus side, Verizon is now trading at the 200-month moving average. This measure has not been tested since 2015, but was a very strong support at the time.
I want Verizon to stay above the $44 mark. If Verizon pulls through and bounces off the 200-week moving average, a move above $45.50 could be attractive to the bulls.
That could open the door to the 10-day moving average as its first test of active resistance. Ultimately, it could bring two gap-fill levels into play, at $46.68 and $49.
But don’t be fooled by the chart: it doesn’t look good.
There is no bullish divergence on the RSI and Verizon stock is in free fall to fresh 2022 lows.
If it can find its footing, great. But just like Snap (SNAP) – Get Snap Inc.’s Class A report, the charts are a bit shaky right now, although Verizon looks a lot better than Snap and has a yield of nearly 6% on top of that. (And don’t forget, Verizon has now increased its dividend payment for 15 straight years.)
If Verizon can hold the $44 level and the 200-month moving average, the bulls might find something constructive to work with. Otherwise, we’ll give this matter a little more time.