Verizon Is Dialing In Further Declines

 | May 02, 2017 | 2:29 PM EDT
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Stock quotes in this article:

vz

Verizon Communications (VZ) is down to a key level on the charts and it doesn't look like it will hold. With most of our favorite indicators lining up on the bear side, I would look for VZ to break it's November low, which could open the way to further losses in the weeks ahead.

A move into the low $40s is possible, so let's dig into the daily and weekly charts below.

In this daily bar chart of VZ, below, we can see that VZ broke below the 50-day moving average line in late January and rallies to the underside of the declining 50-day line were selling opportunities (in hindsight). The slope of the 200-day moving average line turned down back in November and its decline has accelerated.

The On-Balance-Volume (OBV) line peaked in July and has made lower lows and lower highs since. The new lows in the OBV line in April broke the February and the November lows. This weakness in the OBV line tells us that sellers of VZ have been more aggressive for months now. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line, which tells us the trend of T is down.

In this weekly chart of VZ, above, we can see that prices have been below the declining 40-week moving average line for a number of months now. There is an older support area on the chart, in the $46-to-$44 area, from late 2015 and early 2016. This potential support zone could hold, but the weekly OBV line peaked back in July last year and its decline has been hard down -- suggesting that sellers have been aggressive. The weekly MACD oscillator has been in a bearish mode since late January.

Bottom line: VZ could bounce in the short-run but the overall pattern suggests that further declines are likely. A close below $42 would be very bearish.

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
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