Yesterday was AT&T (T) – Get the AT&T Inc. report; today is Verizon (VZ) – Get the Verizon Communications Inc. report.
Shares of the nation’s two largest telecommunications companies are unusually 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 earnings expectations, its full-year free cash flow guidance disappointed investors after it was cut to $14 billion from $16 billion.
This morning, Verizon also presented its own disappointment. Shares fell more than 7% on the report as earnings missed expectations and the company cut its profit outlook.
For what it’s worth, Verizon shares also fell 1.5% on Monday and 2.75% on Wednesday. Verizon shares are now down for the fourth session in the last five and about 14% this week, double its worst weekly performance since March 2020.
That 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.
Verizon stock trading
Verizon Stock Daily Chart.
Chart courtesy of TrendSpider.com
Verizon stock this morning looked like it presented an opportunity, especially if it had opened below the $45.55 level. This was the May low and the 2022 low so far this year.
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If Verizon stock were to break below or open below that level and recover, the bulls could be extended at reasonable risk.
Instead, it continued lower.
On the other hand, Verizon is trading lower at its 200-month moving average. This measure has not been tested since 2015, but it was very strong support at the time.
I want Verizon to hold above the $44 level. If Verizon can do that and rebound from the 200-week moving average, a rise to $45.50 could be attractive to bulls.
This could open the door to the 10-day moving average as the first test of active resistance. Ultimately, it could put two gap-filling levels in play, at $46.68 and $49.
But make no mistake about the chart: this is not a good look.
There is no bullish divergence in the RSI reading and Verizon stock is free-falling to new 2022 lows.
If you can find your starting point, great. But just like Snap ( SNAP ): Get Snap Inc.’s Class A report, the charts are a little choppy right now, though Verizon looks a lot better than Snap and is yielding close to 6%. (And don’t forget, Verizon has now raised its dividend payout for 15 consecutive years.)
If Verizon can hold the $44 level and the 200-month moving average, the bulls can find something constructive to work with. Otherwise, let’s give it a little more time.