Boston, MA 10/02/2013 (wallstreetpr) – Verizon Communications Inc. (NYSE:VZ) (Closed: $46.99, Up: 0.67%) opened flat to negative on Tuesday and spent the session trading almost flat just above the previous day’s closing price. The price action created a bullish Marubozu candle, the strongest single candle pattern. The volume kept subdued though, at 10 million which was a bit lower than the average of 11 million.
The stock had its best time in the period of 1988 – 1999, when it had rallied to $69.50 from a measly low of $15.56. The IT bubble burst affected the stock to a great extent as it crashed to $26 by the end of 2002. The next bull market couldn’t do much for the stock except producing a clear 3 legged bear rally to $46.24 by the end of 2007. The vicious bear market of 2008 brought a new low at $23 but in 2009 and again in 2010 it kept bouncing from the 2002 bottom of $26 levels. From the 2010 bottom a rally unfolded that broke above the 2007 top of $46.24 and hence made a higher high in the long term chart. That rally also took the price above the neckline of the huge Eve & Adam Double Bottom formed over the last 10 years. But the big test comes now as the stock is correcting from exactly 2/3rd or 66.6% retracement level of the entire fall from the 1999 top to the 2008 bottom and testing the neckline of the pattern.
The rally from the 2010 bottom is clearly divided into 5 legs with the 1st and 5th rallies tending to equality, which is the sign of an impulsive move. But the bulls need to keep the price above the 2007 top of $46. The weakness would come with a break of the lower boundary of the channel containing the entire rally from the 2010 bottom, currently at $45. Till then, the investors could buy the stock on dips.
