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.
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?
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.