I gave this mention to my subscribers on Sunday and bought the stock today at 69.59. Stop loss is at 68.55 and objective is 75.90:
AMT Friday Closing Price - 70.50
AMT is a stock that had been on a meteoric rise being the largest operator of cellular towers in the world and the cellular phone use continuing to expand. Nonetheless, the company was recently accused of improper accounting (see enclosed link to article: AMT and the stock took a nosedive from a high of 85.26 seen on May 21st to a low of 69.54 seen just 1 month later. For the past 6 weeks the stock has been extremely volatile having seen a rally up to 78.33 and now a drop back down close to the 69.54 low seen in May. Fundamentally, opinions on this stock run the gamut from strongly bullish to strongly bearish and it is difficult as of this writing to choose a direction fundamentally.
From a chart points of view only, AMT is at an important level of support at $70 that goes back 14 months to June 2012 and therefore a level where a purchase can be considered based on the fact that the risk is small and the profit potential high. In addition, since the initial allegations of improper accounting came out there has been no additional tangible news to link the stock to lower prices than the low prices already seen 6 weeks ago.
To the downside, AMT shows 4 previous intra-week lows between 68.65 and 69.54 that go back to July 2012. On an actual weekly closing basis, support is found at 69.44. It should also be mentioned that the 100-week MA is currently at 69.25 and that line has not been broken since September 2009, meaning that it is a level that will stimulate decent to strong buying by chart traders and not likely to be broken unless further fundamental negatives come out.
I don't disagree that further downside is the most probable scenario, but $44 is not a real target at this time. The 200-week MA is currently at 58.75 and that is a viable target if the stock breaks below 68.55, but it is highly unlikely that the stock will break that line without some tangible negative news. .
To the upside, AMT does show minor to decent resistance at the 50-week MA, currently at 75.90, which does include 2 previous intra-week highs of minor to decent consequence at 75.62 and at 76.22. Rallies up to $76 are highly likely to be seen if the support level holds up this coming week. Further resistance is found at the previous high of consequence seen a few weeks ago at 78.33 that is not likely to be broken unless some of the negative allegations are proven false.
With so much uncertainty around AMT right now, but no assurance of malfeasance yet known, there is a good possibility that the stock will trade within the parameters mentioned above for the next few weeks. With the stock trading now at support, a purchase would be the thing to do. Either way, whatever trade is done (buy or sell), the probability rating is low on either side.
AMT did close on the lows of the week on Friday and further downside below last week's low at 69.73 is expected to be seen this week, likely taking the stock down to the low 69's level where purchases can be considered that will offer small risk.
Purchases of AMT between 69.30 and 69.70 and using a stop loss at 68.55 and having a 75.90 objective will offer a 7-1 risk/reward ratio.
My rating on the trade is a 2.75 (on a scale of 1-5 with 5 being the highest).