Verizon Communications (VZ) was upgraded to a buy recommendation by a fundamental analyst at Citigroup Tuesday. Let's check out the charts and indicators to see if they are on the same page.
In this daily bar chart of VZ, below, I can see that prices have weakened the past 12 months. VZ is trading below the negatively sloped 50-day moving average line and below the negatively sloped 200-day moving average line.
The trading volume has been more active in the past three months but the On-Balance-Volume (OBV) line shows an up and down pattern. A steady rise in the OBV line is what technical analysts will be looking for.
The trend-following Moving Average Convergence Divergence (MACD) oscillator shows some improvement in August but remains below the zero line and far from an outright buy signal.
In this weekly Japanese candlestick chart of VZ, below, I see that prices have been in a longer-term decline. Prices trade below the bearish 40-week moving average line. A large lower shadow on a candle in July has marked a low in price and some sideways price action.
The weekly OBV line remains in a longer-term downtrend. The MACD oscillator is bearish and may be close to a cover shorts buy signal if it continues to narrow.
In this daily Point and Figure chart of VZ, below, I can see a potential downside price target in the $27-$26 area.
In this weekly Point and Figure chart of VZ, below, I can see the same downside price objective as the daily chart above.
Bottom line strategy: VZ may get a temporary lift in price but the bigger picture is the risk for further declines in the weeks ahead. Avoid the long side of VZ.
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