AT&T vs. Apple: Which Is the Better Dow Performer? (You'll Be Surprised)

NEW YORK (TheStreet) -- Apple (AAPL) replaced AT&T (T) as a component of the Dow Jones Industrial Average on March 18. Guess which stock has outperformed since then?

Despite being a momentum giant and the world's largest company, Apple has not performed as well as AT&T. Here's why.

When a stock is removed from the Dow 30 the new stock will rebound until the replacement is made. This is caused by equity money managers who are benchmarked to the Dow 30. The stock being removed trades lower on sales by money managers and the stock going in moves higher as money manages buy the pending new member. This process ends when the change takes place.

Once the dust settles, the old Dow 30 component tends to outperform the new member for a period of time, and we are in this period now for AT&T.

Here's the daily chart for Apple.


Courtesy of MetaStock Xenith

Apple had a close of $127.42 on Tuesday, down 0.8% since joining the Dow 30 at the close of $128.47 on March 18. On Wednesday the stock quickly popped above its 50-day simple moving average of $128.11. The stock is well above its 200-day simple moving average of $116.16. Since March 18 Apple set an all-time intraday high of $134.54 on April 28 and was 5.3% below that level at Tuesday's close.

Here's the weekly chart for Apple.


Courtesy of MetaStock Xenith

The weekly chart for Apple will shift to negative if the stock ends the week on Friday below its key weekly moving average of $128.62. The weekly momentum reading is projected to fall to 63.04 this week from 66.13 on May 5.

Investors looking to buy Apple should place a good till canceled limit order to purchase the stock if it drops to $126.45, which is a key level on technical charts until the end of June.

Investors looking to book profits should place a good till canceled limit order to sell the stock if it rises to $130.79, which is a key level on technical charts until the end of this week.

Here's the daily chart for AT&T.


Courtesy of MetaStock Xenith

AT&T had a close of $34.51 on Tuesday up 2.7% since being dumped from the Dow 30 at the close of $33.59 on March 18. This stock has been above its 50-day and 200-day simple moving averages since May 15 with those averages now $33.89 and $34.11, respectively. Since March 18, AT&T traded as slow as $32.37 on April 17 and close Tuesday 6.6% above this level.

Here's the weekly chart for AT&T.


Courtesy of MetaStock Xenith

The weekly chart for AT&T has been positive since the week of April 24 with the stock above its key weekly moving average of $34.25 and is above its 200-week simple moving average of $33.94. The weekly momentum reading is projected to rise to 68.58 this week from 66.08 on May 5.

Investors looking to buy AT&T should place a good till canceled limit order to purchase the stock if it drops to $33.13, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $35.53, which is a key level on technical charts until the end of this week.

Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share price direction.

Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue while the 200-day simple moving average is in green.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the Crash of 2008, then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.

A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Opinion

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

2 More Reasons to Sell All Your Stocks and Run Away

2 More Reasons to Sell All Your Stocks and Run Away

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast