Shares of Verizon (NYSE:VZ), along with the communications sector of the S&P 500, have traded in an increasingly bullish pattern of late. For VZ stock specifically, this could translate into further upside potential.
In my opinion, while the broader large-cap indices like the S&P 500 are notably overbought for the time being, we continue to see sector and group rotation of stocks that have built ‘bases’ from which they are looking to break higher.
While all of this can change very quickly, the year-end dynamics of underperforming fund managers having to chase the stock market higher cannot be underestimated either, which would support technically sound stock breakout candidates for a trade.
The communications sector of stocks has performed well over the past 12 months and year-over-year is higher by about 20%. Year-to-date it’s up about 30%, directionally trading like the S&P 500. Thus, from a trend-following perspective and taking the below charts into consideration, shares of Verizon should be well supported for now.
VZ stock however is only higher by about 10% for 2019 thus far and could offer an opportunity to catch up with its sector. And by the way, VZ stock currently offers about a 4% dividend yield, which isn’t too shabby considering the low interest rate environment.
VZ Stock Charts
On the multi-year weekly chart we see that in November 2018 VZ stock bumped up against the all-time highs from the year 1999, but that over the past twelve months the stock has done nothing but ping back-and-forth in a range.
Looking at the stock over the past few years, however, we also see that it has systematically pushed higher. If this trend persists, then the past twelve months of consolidation could indeed lead to another breakout higher to fresh all-time highs.
On the daily chart we see that even though Verizon stock still trades within the aforementioned 12-month range, the stock has been consolidating in a tighter range below resistance over the past couple of months. On Dec. 18 my proprietary B2 reversal indicator flashed a marginal “buy” signal, just as the stock is attempting a breakout above said trading range.
Thus, active investors and traders looking to get long VZ stock may consider buying here around the $61-$61.50 area with a next upside target at $63 and possibly followed by $64. Alternatively one could buy a February 2020 $60-$65 bull call spread.
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