AT&T Inc. – Don’t shoot a running horse

Sep 22nd, 2010 – Comment

You have to factor in that at some point the market position that AT&T enjoys will no longer exist and that will have an effect on the stock. On the near horizon AT&T will release its Q3 results on October 21, 201o which puts a flex point on the calendar.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

What are your thoughts on AT & T (NYSE: T)?

I bought in when it was trading close to it’s 52 week low and have held onto it now hitting a 52 week high.

Some analyst are claiming it can go to $32.00.

What are your thoughts? Should I cash in and take profits or does it look like it has more room to grow?

Happy Capitalism!

Thanks

Ken

Hi Ken,

Thanks for the assignment. Congratulations on your profits!

AT&T ( T NYSE) has caught a good ride off its success as the exclusive network supporting the iPhone. In reporting their Q2 results they cited 3.2 million iPhone activations in the quarter. The company is enjoying the fact that they have the GSM network that supports the iPhone while rivals like Verizon Communications ( VZ NYSE) are currently offering a CDMA network that  doesn’t meet the specifications for deployment of the Apple ( APPL NASDAQ) product.

You should be aware that there is talk in the mobile space that Apple is working on a CDMA version of the iPhone. You have to factor in that at  some point the market position that AT&T enjoys will no longer exist and that will have an effect on the stock. On the near horizon AT&T will release its Q3 results on October 21, 201o which puts a flex point on the calendar.

Lets go to the chart room and see if the trade winds lead to Treasure Island.

The three year chart illustrates the lift that AT&T got from support in the $24.00 range. It is now approaching resistance at $30.00 but having looked at the five and ten year charts there isn’t what I would call substantial resistance at that level.

The six month chart provides a closer look at the lift off that started in late July. There is a very well defined double bottom evident which is a reversal pattern indicating that the downtrend that started in December of 2009 had come to an end. The MACD also signaled that buying momentum was now overwhelming the sell side. The presence of  a golden cross on the chart provides additional evidence of strength in the advance.

At this point you are sitting on a profit of close to 20% on your trade. I think that there is more in this ride but I am not going to suggest that there will not be pullbacks from these levels. The next level of support below your position is $28.00, then at $27.50, and finally at $27.00. The last candlestick on the chart is a spinning top doji which indicates that the buyers and sellers are in a standoff with neither one in control of the trading.

As my Peruvian friends  taught me years ago, ” under the master’s eye the horse grows fat”. What your horse – like a hawk!

Happy Capitalism!

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