Verizon Communications: Time for a New Plan?

 | Mar 09, 2017 | 12:53 PM EST
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In watching all the ads on TV lately, Verizon Communications (VZ) seems to be facing more competition in the marketplace -- and a weakening chart picture, too. Is it time to look for a new phone plan, and maybe a new investment? Let's ring up the latest charts and indicators.

This daily bar chart of VZ going back twelve months, below, shows some upswings and several downdrafts. Traders who rely on moving average signals or crossovers would have been whipsawed several times. The price action since November is of more concern to me. The price rally from mid-November until early January created a bearish divergence -- with the higher price highs but weaker momentum readings (lower panel).

As January unfolded, VZ gaped down below the declining 200-day average line, as well as the 50-day average. In February, prices rebounded to the underside of the declining 50-day average line. Prices are still on the defensive, with a weakening On-Balance-Volume (OBV) line and no bullish divergences to suggest a rebound in the near term.

This three-year weekly chart of VZ, above, offers little encouragement. Prices are below the flat-to-declining 40-week moving average line. The weekly OBV line has been pointed down since June and the MACD oscillator is in a sell mode below the zero line.

In this Point and Figure chart of VZ, above, we focus just on price changes and reversals. If the current consolidation pattern should break out on the downside below $46, it could potentially signal a decline to $37.

Bottom line: A rally and close above $51 would strengthen the chart of VZ, but I would not consider that the most likely course from here. VZ could retest the $48 level, and maybe even the $46 level, in the next few weeks.

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