When the market appears to be in a bullish phase, investors in recent years have flocked to the growth stocks promising capital appreciation. In a more defensive environment, we instead gravitate to lower volatility, higher dividend-paying stocks. The recent action in AT & T (T) suggests that this telecom stock can deliver a powerful combination of strong price performance and a meaningful dividend as well.
While the S & P 500 bottomed out in October 2023, T actually bottomed out over the summer of that year. By October, AT & T had pounded out a series of higher lows, confirming a rotation to a bullish trend. By the end of 2023, T had finally reached $17.
50, representing a 61.8% Fibonacci retracement of the downtrend from earlier that year. Over the next six months, this telecom leader essentially bounced between support at the 38.
2% retracement around $16 and resistance at the 61.8% retracement level at $17.50.
The low in April 2024 was also right at the 200-day moving average, and T soon was back higher to retest the same resistance level as in previous upturns. But over the last six weeks, AT & T has finally appeared to break out of this consolidation phase, pushing just above $18 in early June. The price then pulled back to test the breakout level, which is commonly observed in stocks finally breaking out of an established base.
With the consolidation phase in the rearview mirror, AT & T appears set to retest the early 2023 high around $20. Using trendlines How can we con.
