Sprint (S) - Get Report shares were surging more than 70% on Tuesday, climbing on news that it will get the green light to merge with T-Mobile (TMUS) - Get Report. For its part, T-Mobile stock gained more than 11% on the day.
A judge approved the $26 billion merger, ruling that it’s unlikely to hurt competition. It creates a three-company race, as the duo joins fellow telecommunications giants AT&T (T) - Get Report and Verizon (VZ) - Get Report.
The deal has been a long-time in the making and doubt was creeping into investors’ minds that it would be approved. But those doubts are being put to rest now.
The move is sending both stocks to new 52-week highs, making Sprint a perfect pick as Real Money's Stock of the Day. Let’s look at the charts.
Trading T-Mobile Stock
While doubts lingered, Sprint stock slumped to new 52-week lows earlier this month. However, investors in T-Mobile stock didn’t seem to worry, as shares hit new highs just last week.
Even though shares were on the move higher, T-Mobile stock was running into possible resistance between $83 and $85. That concern has quickly abated, with shares bursting over this level and ripping right through channel resistance (blue line).
On Tuesday, shares pierced $95, but are recoiling a bit from those highs. Now what? I want to see if T-Mobile stock can get to $100.
Shares have been consolidating for several months, bottling up under $85. With this week’s surge, investors can see that momentum is clearly flipping into the bulls’ favor. The MACD reading says as much too (blue circle).
If shares can’t push up toward $100, investors need to be on the lookout for a pullback. Let’s see if TMUS stock can maintain above $90 and the backside of prior channel resistance. Below that does put $85 back on the table though.
As for Sprint, the weekly chart above outlines some of its key levels. Bulls will now want to see the share price hold up over the $7.90 to $8 level. That was major resistance in 2019. Over it now, it would be encouraging to see it stay north of this zone.
Below $7.90 and technically speaking, the $6.50 area becomes key. Not only has this been a key zone over the past few years, but the 200-week and 50-week moving averages are nearby.
Remember, this is an M&A situation, so the merger deal and fluctuations in stock prices will impact each other. In any regard though, these are the levels to know.