I find today's bearish chart a bit ironic. I've been looking at more-conservative names for bullish charts and one chart that looks bearish today is AT&T (T). The good news is I don't think the overall picture is bleak, but I do worry about a period of underperformance, here.
The stock threatened key support at $34 yesterday. A strong overall market recovery helped T close $0.02 over support, but now the concern is that the stock appears to need the market to hold serve just to maintain that support. If it falls under $34, then I expect $33 to find support with a possible short-term overshoot to $32.50.
Resistance sits at $34.75. If the stock can find its way above there on a daily basis, then the ball should bounce back to the bulls. The Relative Strength Index (RSI) is under 50 while the Vortex Indicator (VI) just went bearish. Both the 5-day and 13-day Simple Moving Averages (SMAs) are headed lower. A lot of what happens next will depend on the feeling investors have about the DirecTV (DTV) acquisition. But based on the short-term view, they are leaning bearish. As long as we remain over $34, this is just a potential trigger that those holding T should keep in mind. I still like T as a core name, longer term, but on a break under $34, I'll hedge my holding.
The weekly chart is a little less bearish, but the $32.50 number comes into play, again.
T has been trading in a wide range, here, since 2014 -- and an even wider range since 2012. Right now, we are in the middle of the short-term weekly range and near the top of the longer-term pattern. The loss of the support on the daily chart becomes clearer on the weekly chart (dotted blue pattern). Actually, a close around $34 shows a break of support based on the weekly chart. The RSI is just holding support with the Triple Exponential Average (TRIX) and the Moving Average Convergence Divergence (MACD) both threatening bearish crossovers to end the week. If we see both trend and momentum break bearish -- along with price losing support -- then, at best, T performs in line with the overall market. But more likely, it indicates a disappointing performance over the next 3 to 6 months.
In the end, if we see a daily close under $34 or a weekly close under $34.20, I will hedge off my long stock with a delta neutral position by buying in-the-money puts with an October expiration.