VZ looks bullish intermediate term
Updated
VZ is again at the top of its one-month regression channel, having last tested it on Monday. I think there's a good chance that this new push will succeed. If so, it will quickly bring the post-earnings gap into play (red drop in the chart). A second, shallower gap is above. The Sep 30 high on the chart is also the YTD high, as the stock is near the top of a 2-year bottom consolidation.
On a daily chart there's also a double bottom pattern that has been in place since early September. For VZ 17 of the last 22 double bottom patterns have reached their first profit target, which in this csae is at $44.81, just above the YTD high.
I am already long VZ with stock, but today added a vertical call spread. I view both positions as swing trades, not investments, and will reassess if/when the stock reaches the top of its post-earnings gap. If the stock were to substantially drop below the upper edge of its regression trend, I would likely exit both positions.
On a daily chart there's also a double bottom pattern that has been in place since early September. For VZ 17 of the last 22 double bottom patterns have reached their first profit target, which in this csae is at $44.81, just above the YTD high.
I am already long VZ with stock, but today added a vertical call spread. I view both positions as swing trades, not investments, and will reassess if/when the stock reaches the top of its post-earnings gap. If the stock were to substantially drop below the upper edge of its regression trend, I would likely exit both positions.
Note
As predicted in the original note, VZ has broken through the upside of the 1-month regression channel and entered the post-earnings gap. At this point, the 1-wk, 1-month, and 12-month regression trends are all rising. Only the 3-month trend is still down. I am raising my stop-loss to $42.90, the bottom of the earnings gap.Note
As of this morning VZ has closed the post-earnings gap. I might close the call spread today.Trade closed: target reached
I've decided to close this trade. I suspect that many traders will pass on ideas like this because it seemed to have a relatively small expected return. But the return potential of a trade idea can be amplified as needed via options. In this case, I chose a Dec 14 43/45 call spread. And the return was exactly 100% in 3 days. I could have stayed in this trade as the maximum profit (if VZ stays gets above 45 by the expiration date) was more than 200%. But the thesis had substantially played out, and I'm happy to take the win.Note
I am still holding my position in VZ shares. My target for those is $44.81. SL at $43.30.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.