For all the celebrating of all things iPhone and mobile, one place where the rejoicing has been more muted is in the market for telecom service providers. Here, profit-taking in a number of stocks that have outperformed in recent days and weeks has begun to take a handful of widely-traded telecom stocks to levels where traders have been more likely to buy than sell.
Shares of Verizon Communications (NYSE: VZ) have sold off for seven days in a row, with the last four days finishing in oversold territory above the 200-day moving average. The drop in the stock represents Verizon’s second significant pullback since rallying to 52-week highs at the end of 2011. The first pullback, a four-day sell-off with three closes in technically oversold territory, led to a rally during which VZ gained for six straight days.
Verizon has a short-term, positive edge of more than 1% ahead of trading on Friday and a neutral, 6 out of 10 rating.
Also selling off in the wake of new highs are shares of BCE Inc. (NYSE: BCE). The stock has closed lower for four days in a row, the last three in technically oversold territory, and is set to begin trading on Friday with a positive edge in the short-term of more than one and a quarter percent.
BCE’s last significant pullback was in mid-December. Then, a retreat to new, short-term lows and a finish in oversold territory served as the prelude to a rally during which BCE gained more than 3% in five days.
The selling in AT&T (NYSE: T) is perhaps the least fortunate from the perspective of buyers of weakness who draw a strict line in the sand when it comes to the 200-day moving average. Shares of T closed lower for the third day out of the past four, but managed to finish in bear market territory as of Thursday’s close. Trading in both oversold territory and at its lowest level in a month, AT&T has neutral ratings of 6 out of 10 and a short-term edge of more than half a percent.
Note that AT&T reported sales of smartphone during its earnings report afterhours on Thursday. The stock was little changed immediately after the report.
ETF traders have a few options to consider when looking for exposure to the telecom sector without single stock risk. Among the most widely traded option is an ETF: the iShares Dow Jones U.S. Telecommunications Sector Index Fund ETF (NASDAQ: IYZ). IYZ closed lower by more than 1% on Thursday, finishing lower for a third day out of the past four.
Be sure to read our latest column from 7 Stocks You Need to Know: Marvell Makes Good: Nearly 9% in Less Than a Week.
David Penn is Editor in Chief of TradingMarkets.com.