Buy the Dip in Comcast? Let’s Look at the Charts

Comcast beats quarterly earnings and revenue expectations. Here's how to trade the stock on the dip.
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Comcast  (CMCSA) - Get Report shares were lower on Thursday, falling about 3% despite better-than-expected fourth-quarter earnings.

The company reported earnings of 79 cents a share, 2 cents ahead of expectations, while revenue of $28.4 billion grew 2% year over year and beat analysts’ estimates by $220 million.

Does this create a buy-the-dip situation? Broadly speaking, this was a pretty solid quarter of business. On top of that, Comcast hiked its dividend 9.5%, bringing its forward yield to 2%, and will get into the streaming business with its Peacock platform in a few months.

It makes Comcast an excellent pick for Real Money’s Stock of the Day.

While Comcast will face plenty of competition in the streaming game - with Walt Disney  (DIS) - Get Report, Apple  (AAPL) - Get Report and Netflix  (NFLX) - Get Report being just a few - its entrance could lead to more upside in the coming quarters.

Let’s take a closer look at the charts.

Comcast, Apple and Disney are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CMCSA, AAPL or DIS? Learn more now.

Trading Comcast Stock

Daily chart of Comcast stock. 

Daily chart of Comcast stock. 

Shares of Comcast have been hot, rallying more than 14% from the December lows to the recent high. That’s the problem with stocks that rally too far too fast, particularly ahead of an event like earnings.

Some investors are likely asking why there’s a bearish reaction to a positive report and if that’s a sign of things to come for Comcast stock. The stock could decline further below current levels, while buying on the first day of a post-earnings pullback is not a preference for many investors.

That said, Comcast stock has been a winner and this shallow dip may be just what the doctor ordered.

Comcast is falling into uptrend support (blue line) and the 20-day moving average. If this area holds, bulls can look for a rebound back to $47. This has been a significant level for several months and reclaiming it puts the recent high back on the table. If it acts as resistance, CMCSA shares may dip again.

The great thing about this setup? If support fails, traders know right away and can cut their losses as they know the trade is not working. In that case, a test of the 50-day or 200-day moving average may be in store.