Techie Tuesdays: Verizon Communications

This is the sixth installment of Techie Tuesdays. So far we have looked at Exxon Mobil, Starbucks, and J.P. Morgan Chase, Medco Health Solutions and Toronto-Dominion. Today we will tackle Verizon Communications!

Verizon Communications (Ticker: VZ), known in short as Verizon, is a New York City based company that provides wireline and domestic wireless communication services. Verizon has over 228,000 employees and brought in $96.55 billion (in the 12-month period ended 9/30/08) in revenues.

Verizon’s stock has lost 25 percent of its value in the past year, which is worse than the S&P 500 (34.5 percent) in the same period. (Data from Yahoo Finance)

So how strong is Verizon’s signal? Yesterday, VZ closed at $32.48. Let’s see what the technical indicators reveal about VZ.

Today we’ll use the Moving Average Convergence Divergence (MACD).

The MACD uses exponential moving averages from three periods: 9, 12 and 26 days to form two lines. One line plots the difference between the 26 and 12-day EMAs, the other line is the 9-day exponential moving average of the MACD and serves as a trigger line. Both lines are tracked against a center line (which equals zero). There are a few ways to use the MACD, here are the signals:

Bullish – Positive divergence (26 day EMA minus 12 day EMA is greater than zero), bullish moving average crossover (the MACD line crosses above the 9 day EMA of the MACD), and the bullish center line crossover (the MACD line crosses above zero).

Bearish – Negative divergence (26 day EMA minus 12 day EMA is less than zero), bearish moving average crossover (the MACD line crosses below the 9 day EMA of the MACD), and the bearish center line crossover (the MACD line crosses below zero).

The chart is rather large to include in this post, so click here to view the Yahoo chart for Verizon and let’s take a look at its MACD data as of 1/5/09.

MACD (26-day minus 12-day EMA): 0.58

9-day EMA of the MACD: 0.68

Divergence (MACD minus 9-day EMA of the MACD): -0.10

The MACD signs appear to be mixed. As of 1/5/09, VZ has negative divergence which is bearish. However, the MACD is above zero, which is bullish. Upon examining the crossovers on the chart we can see that the MACD and the 9-day EMA are both above zero, but have crossed each other at least four times in the past two months.

I decided to look at VZ’s simple moving average (SMA) for more insight and got more mixed signals: the moving average is sloping up, but the current price is below the SMA.

The signal is not very clear, but TST’s Techie Tuesday Recommendation: BUY