AT&T: What Tuesday's Close Tells Us About This High-Yielder

 | Jul 19, 2017 | 10:05 AM EDT
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We checked the charts of AT&T Inc. (T) last month and concluded that, "If T cannot hold $37.50 it is probably going to test the $36 level and could slip further."

Yesterday, T tested $36 and closed at $35.99. The question of the day is whether prices will hold here or decline still further. With T yielding close to 5.5%, yield hungry investors may be attracted. Let's see if the latest charts and indicators give us any fresh insight.

In this daily bar chart of T, below, I can see how prices made a topping pattern from December through March. The downtrend got under way in full force in April. From the March high T has made two distinct trends to the downside. Momentum readings from May to July show some improvement or higher lows and create a bullish divergence when compared to the price action of lower lows. 

Another fresh observation about this chart is that the daily On-Balance-Volume (OBV) line has not made a lower low the past three months even as prices have made lower lows. Traders are not being aggressive on the sell side. Interesting.

In this weekly chart of T, below, we see a weak picture. Prices are below the 40-week moving average line. The weekly OBV line has worked lower since March and the MACD oscillator is bearish.

In this Point and Figure chart of T, below, we see some support not on the weekly bar chart at $35.66 and $35.31. Prices held there before and they could again.

Bottom line: Momentum has slowed and sellers are not being aggressive, but is that enough to have the $35.66-$35.31 support hold? Tuesday's new low close tells us to go slow despite the attractive yield.

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