After years of stagnation and underperformance, AT&T finally found its stride in 2019. It rallied for five straight months and came into 2020 at all-time highs (when adjusted for its dividend).
Then the coronavirus happened and although the broader indices have recovered AT&T really has struggled.
On Wednesday, it looked like AT&T was going to roll over, with shares down about 3% in premarket trading. That came despite a top- and bottom-line earnings beat.
It helped that AT&T reported 41 million domestic subscribers for its HBO Max service and almost 61 worldwide subscribers. The company said activations have doubled since the end of the third quarter. Adding Roku (ROKU) - Get Roku Inc. Report and Amazon (AMZN) - Get Amazon.com Inc. Report as providers likely helped.
Shares have since reversed off the lows, but were struggling to stay positive on the day. Can the gains continue?
Shares of AT&T rose sharply in late November, only to crater back down in December. However, that low mark for the month at $28.32 has held solid since.
AT&T has been consolidating in a sideways manner since, trying its hardest to push higher.
While the stock was gaining some pre-earnings momentum over the 50-day, 100-day and 200-day moving averages, it’s struggling to maintain that momentum after the report.
Further, the 50-week moving average continues to reject AT&T.
So what do bulls want to see? It’s simple, really. From here, investors need to see AT&T clear all four of these key moving averages. Additionally, the stock needs to clear the January high at $30.09.
Clearing this level is bullish. However, if AT&T can’t do it in the next few weeks, it could set up for a possible monthly-up rotation if it can do so in February.
That would put the $31.89 level in play, followed by a potential move toward the June high just over $33.
On the downside, we do not want to see AT&T lose the $28.30 to $28.50 area.
Between its dividend, low valuation, decent earnings report and momentum in HBO Max, perhaps AT&T can get going on the long side. However, we need to see some confirmation, which comes from powering through some of these key short-term levels.