360 Degrees of AT&T and Comcast

The ability of cable companies to bundle the 99.9% of content that you don't want with the 0.1% of content that you do want will go the same way as the ability of music companies to bundle 10 terrible songs with one good one.

You want to fight the empowering of the consumer? You want to bet that the cable companies can fight the price erosion that's just about to start impacting their business? That's not a good bet. As my trademarked phrase states, "They can't stop the revolution." They just can't.

AT&T, of course, is just getting started in the business of charging their customers outrageous amounts of money for the 0.1% of content that the customer will consumer. And they're going to spend billions upon billions building the cable "head end" for broadcasting that content nobody wants. And they're doing it just in time for the revolution to really kick in and undermine that investment.

Guess they'll have to continue to figure out how to get some new "de-regulations" or something from the government to ensure they get some return on that investment as the telecom industry has been doing since AT&T was born. Meanwhile, the free market is going to pass them by anyway. Nobody's stopping this revolution, man.

Sell Comcast, cable and all of those that are trying to stop the revolution, because they will lose.

At the time of publication, the firm in which Willard is a partner was net long Apple and Google, although positions can change at any time and without notice.

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Long-Term Resistance Looms, by Alan Farley

AT&T and Comcast are solid telecom performers, but how long can the party last? Both stocks are trading at multiyear highs after breaking out in September. But they're also headed toward major resistance that could stall upward progress. My advice is to pick them up for trading profits but avoid them as long-term investments.

AT&T (T Quote) rallied to a recovery high at $29.61 in 2003 when it was known as SBC, near the end of its long bear-market decline. It returned to this level one month ago and broke out on high volume. The stock has been moving higher in a steady uptrend since that time, but trouble lies just above current price levels.

Note the massive double top formed between 1998 and 2002. The stock is now pushing into broken support from that pattern between $35 and $38. This barrier should slow the rally and might even trigger an intermediate correction that carries it back down into the upper $20s.

How can long-term resistance trigger reversals five or six years down the road? Because all types of technical traders and institutions watch these levels, using them to take profits and reverse positions.

Comcast broke above 2004 resistance at $35.36 in late September and rallied to a four-year high. The stock has continued to move higher since the breakout and is now approaching $40. Like AT&T, Comcast is slowly approaching longer-term resistance that could end its strong rally.

Note the rounded top in 2001. This looks like the end of the road for the current uptrend. The good news is there's still time to pick up the stock and take away a few points before resistance kicks into gear. So it's OK to buy on a pullback as long as you keep watch on the old high as the rally progresses.