Skip to main content

Verizon Stock: Should Investors Go Long? The Chart Gives a Hint.

Verizon stock has a near-5% dividend yield and just reported better-than-expected guidance. Even better, the chart has a low to measure against.

Verizon  (VZ) - Get Free Report stock is up 2% on Wednesday after the telecom-services titan reported earnings.

It has not been an easy ride for the New York company, which has faded 15% from its high on May 10. Ironically, growth stocks bottomed around this time, while Verizon topped out.

The weakness hasn’t been exclusive to Verizon, as AT&T  (T) - Get Free Report has been weak as well, particularly since announcing its split up and acquisition of Discovery  (DISCA) - Get Free Report.

For Verizon, the stock had been trapped in a downward channel before plunging out of the channel and falling almost 7% in just five trading sessions.

But it appears we have a low to trade against, particularly after the post-earnings rally following better-than-expected third-quarter results and increased guidance.

With its almost 5% dividend yield, bulls should be interested in this name. Let’s look at the chart.

Trading Verizon Stock

Daily chart of Verizon stock.

Daily chart of Verizon stock.

When Verizon shares broke below channel support, the stock plunged below the 2021 low at $53.83.

That led to a low at $50.86 last week, before a solid reversal took place, sending the shares back toward $52.50 ahead of the earnings report. To see more follow-through after earnings is certainly an encouraging sign for bulls.

While many may feel as if they’ve missed their chance in Verizon stock, I don’t think that’s the case.

If bulls were to go long at $53 and use a stop-loss just below the most recent low, they would need to risk only about $2.25 a share on the downside.

A break of the $50.86 low could put sub-$50 in play. Specifically, though, it would likely put the Covid-19 low in play, at $48.84. For what it’s worth, AT&T has already broken below its coronavirus low.

I like a long position in Verizon. The earnings risk is now removed with a post-event rally, while we have a definitive low to measure against. That and a 4.85% dividend yield create a juicy payout.

With the stock back above the 10-day moving average, the 21-day moving average and the underside of Verizon’s prior downward channel are now in view.

Above both of these measures puts the $53.83 level -- the prior 2021 low -- back in play.

Should the shares reclaim that level as well, the 50-day moving average and prior downtrend resistance are in play.

If Verizon stock can clear all this clutter, the bulls can focus on the 200-day moving average and the weekly VWAP measure. 

Assuming Verizon stock takes its time getting there, we at least have a solid dividend to collect in the meantime.