Verizon VZ beat estimates with its first-quarter earnings today, and the stock of the New York telecom giant has a positive weekly chart.
The stock opened slightly higher but stayed below its 200-day simple moving average at $58.29, with a morning high of $57.78.
If the stock ends the day above its five-week modified moving average at $56.45, the weekly chart will remain positive. At this writing, the stock is t just under $57.
The surprise in the earnings report is that Version Wireless reported a significant decline in customer activity on its devices in the quarter.
I would have thought that Americans on lockdown would be using their devices more during the COVID-19 pandemic.
Some subscribers either canceled their accounts or did not pay their bills. Here is the complete story as complied by TheStreet.com.
Verizon is a component of the Dow Jones Industrial Average and has been a perennial member of the so-called Dogs of the Dow with a dividend yield above 3%.
Today the p/e multiple is a touch above 12 with a dividend of 4.24%, according to Macrotrends.
The stock opened this morning at $67.64, down 6.1% year to date and 7.6% below its 52-week high of $62.22 set Dec. 20. It is also 18% above its March 25 low of $48.84.
Once the economy is normalized, Verizon will benefit from its product diversity.
Its smart dash-cam helps truck drivers stay safe on the highways. And Verizon Wireless is the largest smartphone carrier in the country.
The company is poised for growth as 5G technology expands nationwide.
And if the content is king, Verizon owns Oath which provides the Internet content from AOL and Yahoo.
Verizon Media provides the AOL feed including headlines and stories. Yahoo Finance provides news from the financial markets including streaming-video services.
The Daily Chart for Verizon
Courtesy of Refinitiv XENITH
The daily chart for Verizon shows the volatility seen over the past 52 weeks.
The stock regained upward momentum on Sept. 18 when a golden cross formed. This happened when the 50-day simple moving average rose above the 200-day simple moving average, indicating that higher prices would follow. This led the stock to its 52-week high of $62.22 set on Dec. 20.
This year the stock opened below and stayed below its semiannual and annual risky levels at $63.40 and $64.49, respectively.
The stock closed below its 200-day SMA on Feb. 18, ending the golden cross.
After a death cross formed on March 12, the stock plunged to its March 25 low of $48.84.
A death cross is the opposite of a golden cross. It occurs when the 50-day SMA falls below the 200-day SMA, indicating that lower prices will follow.
As Verizon moved higher it returned to its 200-day SMA at $58.29, which was tested between April 14 and April 23 as an opportunity to book profits.
The 50-day SMA is a key level to hold at $55.72.
The weekly value level is $52.65, with its monthly risky level at $60.66.
The Weekly Chart for Verizon
Courtesy of Refinitiv XENITH
The weekly chart for Verizon is positive, with the stock above its five-week modified moving average at $56.45.
The stock has been above its 200-week simple moving average, or reversion to the mean, since the week of April 3 with this average now at $53.13.
The 12x3x3 weekly slow stochastic reading is projected to rise to 55.93 this week from 47.13 on April 17.
Trading Strategy: Buy Verizon on weakness to its 50-day SMA at $55.72 and add to positions at its 200-week SMA at $53.13. Reduce holdings on strength to its monthly risky level at $60.66.
How to use my value levels and risky levels:
The closes on Dec. 31, 2019, were inputs to my proprietary analytics. Semiannual and annual levels remain on the charts. Each uses the past nine closes in these time horizons.
Second-quarter 2020 and monthly levels for April were established based on the March 31 closes.
New weekly levels are calculated after the end of each week.
New quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year. Annual levels are in play all year long.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share-price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
How to use 12x3x3 Weekly Slow Stochastic Readings:
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with how to find the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic reading covers the past 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold.
A reading above 90.00 is considered an “inflating parabolic bubble” formation that is typically followed by a decline of 10% to 20% over the next three to five months.
A reading below 10.00 is considered as being “too cheap to ignore” which typically is followed by gains of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.