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How to Trade AT&T After It Reports Earnings

AT&T is up slightly ahead of earnings. Can earnings help snap the stock out of a multi-quarter funk? Let's look at the key levels now.

Shares of Verizon  (VZ) - Get Verizon Communications Inc. Report were down slightly on Wednesday after the company reported earnings. Investors won’t have to wait long to hear from AT&T  (T) - Get AT&T Inc. Report, which will report before the stock markets opens on Thursday.

The stock has languished vs. the S&P 500, with the index up 47% in the past 12 months, while AT&T has fallen 3%.

For its part, Verizon hasn’t done much better. But AT&T has outperformed its largest peer over the last six months and so far this year.

Still, the group has had a sad showing vs. the rest of the market as the stocks struggle for upside momentum.

AT&T stock is up about 50 basis points so far on Wednesday. However, that may have less to do with Verizon’s solid report and more to do with Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report.

Netflix was down after disappointing subscriber numbers in its latest earnings report. Could that be a positive for AT&T’s HBO Max service? That’s what investors are hoping for.

Surprisingly, the momentum in HBO Max has not translated to momentum in AT&T stock. Is that about to change?

Trading AT&T

Weekly chart of AT&T stock.

Weekly chart of AT&T stock.

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AT&T’s horrendous pullback isn’t unique to the stock. Almost every stock took a similar or worse beating last year. However, most of those stocks have seen a big recovery, as evidenced by the recovery to new highs in the major indices.

For AT&T stock, that recovery hasn’t played out. With an improving balance sheet and momentum in HBO Max, it seems like only a matter of time before its recovery gets underway.

In order for that to happen, we need to see the stock get above and stay above $31. This has been a supply zone, with buyers unable to maintain the stock above this area for very long.

Above that puts the monthly VWAP measure in play, just below the December high at $31.89.

If AT&T stock can clear $32, then we can start to look for higher prices. Specifically, the post-coronavirus selloff high from June sits up at $33.25.

To get there, AT&T will also have to clear its 100-week and 200-week moving averages. If it can do that and clear the June high, then we could finally see a lasting rally.

However, keep in mind that that's a lot of overhead resistance to work through. Right now, the key on the upside is $32. A weekly close above that opens up more upside.

On the downside, there’s support near $28.50. A break of $28 could put the $26 to $26.75 area in play, which is a long-term demand zone that should certainly act as support if AT&T gets there.