In this blog, we will take a look at the drop in AT&T in July and how that presented a buying opportunity in the stock which we highlighted on our chart. We also prove that all markets are technical and even when fundamentals news can create short-term volatility in the market, it doesn’t have the power to change the long-term trend. We are all aware that AT&T has been in the news a lot lately because of it’s $85 billion acquisition of Time Warner. We also know that federal government had gone to court in order to block this deal. On Tuesday, June 12 2018, . This should have been viewed as a good news for AT&T and stock price should have rallied but let’s take a look at the the price action on June 12 and see what happened after the ruling on June 12.
AT&T Chart below shows stock price was trading around $34.25 area, we have highlighted the area between 33.94 – 35.06 with a blue box because it represented 100 – 161.8% Fibonacci extension area of blue (A)-(B) i.e the rally from 31.17 (May 9) low to 32.96 (May 25) high projected higher from 32.12 (May 29) low. When AT&T got the go ahead from the court on June 12, stock price was already in the blue box which means there wasn’t enough room for a rally so there was an initial spike higher to the top of the blue box but it was quickly rejected resulting in a sharp drop to 33.01 after hours. So after hours, stock price had dropped which supports our case that markets move on the basis of technicals and not fundamentals.
