Do These Signs Mean AT&T’s Stock is Over Valued?

With shares of AT&T (NYSE:T) trading around $35, is T an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

AT&T (NYSE:T) is a major player in the telecommunications services industry. A bellwether of a company, its presence is known and still continues to expand. As technology advances, AT&T is building infrastructure in order to support these advances. This company has the resources and know-how to continue doing what it does best, telecommunications

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T = Technicals on the Stock Chart are Mixed

AT&T’s long term multi-year chart tells the story of a utility company. Don’t get me wrong, it has had major moves over the years. At this point though, it looks to be in a long-term downtrend extending from highs back in 1999.  Currently, it looks to be headed back up towards the $38 level, and it could head towards $43 per share. AT&T has been uptrending higher but could see long-term resistance near $38 per share.

Moving averages help put more clarity to a trend. The direction and order of the key moving averages determine the trend and the strength of this trend. What are the key moving averages? The key moving averages are the 50-day, 100-day, and 200-day simple moving averages. The 20-day moving averages helps determine the short-term trend. How does AT&T’s trend measure up? Well as of today, AT&T stock is consolidating above its 20-day, 50-day, 100-day, and 200-day simple moving averages. However, these moving averages are crossing each other, which indicates a transition period for the stock. Furthermore, the direction of these moving averages is mixed, adding to further confusion. So, there is no clear indication of the trend in this stock.

Investor sentiment is another key factor in the success of a stock. After all, the market has to agree to a certain point in order for prices to trend a certain direction. One way to gain perspective into investor sentiment is through the use of the options market. More specifically, taking a look at the implied volatility and implied volatility skew levels of AT&T options may help determine if investors are bullish, neutral, or bearish. The implied volatility of AT&T options is at 17.86 percent today, which coincides with a 66th percentile over the last 30 trading days and 22nd percentile over the last 90 trading days. What does this mean? This means…

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