Verizon Looks Vulnerable to Further Erosion

 | Feb 14, 2017 | 2:17 PM EST
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Verizon Communications  (VZ) has seen rallies and declines over the past 12 months. But the current bout of weakness since the beginning of January does not look like it has run its course and investors and traders should be cautious about new positions.

In this one-year daily chart of VZ, below, we can see a rally from $46 to short of $55 from November to early January. From this early January peak, VZ quickly gave back most of the rally. Prices are below the declining 50-day moving average line and the declining 200-day moving average line. 

The On-Balance-Volume (OBV) line is weak and the Moving Average Convergence Divergence (MACD) oscillator is well below the zero line. Depending on the price action, the MACD oscillator could remain bearish or signal a cover shorts buy. A close below $48 looks like it will keep the bear in control and set up VZ for a test of the $46 low in November.

In this three-year weekly chart of VZ, below, we can see that prices have moved up and down in a wide trading range. VZ is trading below the declining 40-week moving average line. The OBV line has weakened over the most recent two months and the MACD oscillator is in an outright sell mode below the zero line.

In this Point and Figure chart of VZ, below, we can focus just on price movement. VZ has been in a down column of Os and a break below the $46 low could open up the possibility of further losses to around $37.

Bottom line: VZ could bounce to $50 but the bigger risk looks to be further weakness and a break of support around $46.

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