Verizon (VZ) reports tomorrow morning before the 9:30 open and in anticipation of the number Miller Tabak's Chief Technical Market Analyst, Jonathan Krinsky, weighed in on the stock relative to the performance of the US Telecom sector in general.
As Krinsky notes, "Telecom is the worst performing sector year to date by far, up just 2.02%" (as of the October 15 close), while the iShares US Telecom ETF (IYZ), a much broader basket of telecom stocks, is up 15.5%YTD.
So how is Verizon performing relative to the IYZ?
In this morning's note, Krinsky writes,
While Verizon remained above its own well-defined uptrend, it appears to be at a critical stage of support. Breaking the September low at $45.08 would clearly break the uptrend line, and suggest downside to the $40-$41 area. Adding to the weakness is the relative strength that VZ has shown to the IYZ. It has broken not only two year horizontal support, but a three year uptrend line. If it is going to hold, now is the spot to do it, but we would tend to avoid this name until the technicals improve.
And here's the accompanying chart from the report:
While Verizon is just barely holding the three-plus year trend line, relative to IYZ basket, it's breaking down and, as Krinsky mentions, it appears to be "at a critical juncture."
As such, tomorrow's earnings announcement may determine whether VZ bounces off the trend line or breaks down with fervor.
At this point though, Verizon looks like a bad house in a bad neighborhood.
If you are interested in the full report, you can email Jonathan Krinsky directly at firstname.lastname@example.org.