Verizon is set for its worst week since October 2008, but it’s sitting on must-hold support right now.
The stocks of the country’s two largest telecom companies are uncharacteristically volatile as they report second-quarter earnings.
On Thursday, Verizon shares fell 2.9% in sympathy with AT&T’s earnings selloff. While AT&T beat on earnings expectations, its full-year free cash flow guidance disappointed investors after a trim to $14 billion from $16 billion.
This morning, Verizon delivered its own disappointment as well. The shares are down more than 7% on the report, as earnings missed expectations and the company cut its profit outlook.
For what it’s worth, Verizon stock also fell 1.5% on Monday and 2.75% on Wednesday. Now Verizon stock is down for the fourth session in the past five and off about 14% this week — double its worst weekly performance from March 2020.
This will also mark the stock’s largest one-week decline since October 2008.
But don’t fret, bulls: Support may not be too far off.
Trading Verizon Stock
Verizon stock this morning looked as if it presented an opportunity, particularly if it had opened below the $45.55 level. That was the May low and the 2022 low so far this year.
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Had Verizon stock broken below or opened below this level and reclaimed it, the bulls could get long at reasonable risk.
Instead, it continued lower.
On the plus side, Verizon is now trading down into the 200-month moving average. This measure has not been tested since 2015, but at the time it was very strong support.
I want to see Verizon hold above the $44 level. If Verizon can do that and bounce from the 200-week moving average, a move back up through $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 put two gap fill levels in play, at $46.68 and $49.
But make no mistake on the chart: This is not a good look.
There isn’t any bullish divergence on the RSI reading and Verizon stock is free-falling its way down to new 2022 lows.
If it can find its footing, great. But just like Snap (SNAP) – Get Snap Inc. Class A Report, the charts are a bit broken right now, although Verizon looks much better than Snap and has a near-6% yield to boot. (And don’t forget, Verizon has now increased its dividend payment for 15 years in a row.)
If Verizon can hold the $44 level and 200-month moving average, the bulls may find something constructive to work with. Otherwise, let’s give this one some more time.