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I like "T" to the high teens

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A couple of days ago in our intra-day commentary we talked about some of the bullish technicals that could be developing in shares of AT&T (NYSE:T) with a trade above the $17.60. I wanted to see a trade at $17.80 to push me onto the dance floor. Well... get those boots on and lets go dancing.

AT&T Chart -

We've been keeping a close eye on shares of AT&T (NYSE:T)for the past couple of days. The trade here at $17.80 looks bullish.

One thing we looked for in our analysis was relative strength. With the S&P 500 (SPX.X) trading 1,142 here and T trading $17.80, we can calculate RS=15.50. Is that enough to get our RS chart back in a 3-box reversal higher? Let's hand chart it and see.

Relative Strength Chart of T vs. SPX

Relative strength for AT&T (NYSE:T) vs the S&P 500 Index (SPX) has indeed just turned higher with a reading of 15.50. I like T long with a stop just below 50% retracement at $16.40. Over time, a shorter-term trader can walk their stop up under the stock, but this is our starting point.

Potential catalysts are the company's recent interest in spinning off its broadband division. We recently commented about some of the weakness in shares of AOL Time Warner (NYSE:AOL) as they had expressed some interest in those assets. There are others, but today's late session move higher may be in anticipation of some announcement being made over the weekend or early next week. Right now the technicals are indicating bullishness.

Jeff Bailey
Senior Market Technician
Option Investor

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