AT&T Inc. (T) may have won its fight for Time Warner Inc. (TWX) against the Department of Justice in court, but investors are not cheering, with the stock trading lower Wednesday by over 4% to $32.90 around noon. Based on an analysis of the technical charts, shares could still have even further to fall, perhaps by an additional 15%. It would bring a total loss to the stock of nearly 20% from its closing price of $32.68 on Tuesday.
It adds to what has already been a painful year for AT&T, with shares already down by about 12.1% through Tuesday, and over 13% off the highs last seen in October 2017. Even options traders are betting the decline continues through the start of next year.
Mounting debt and a declining wireline business will continue to be an ongoing concern while maintaining a dividend yield that has soared to over 6%. It is estimated that AT&T’s debt may rise to $250 billion after the completion of the deal.
T data by YCharts
Shares of AT&T have been trending lower since March 2017 and have shown no ability to reverse that trend. Over this period, every time the price has risen, shares have been greeted with a wave of more selling, driving the price even lower. The stock is trading right above a critical technical support level at $32, which has held steady since 2011. If shares fell below that support, the stock would fall to $27.50, a drop of over 15% to its next support level.
Another negative indication is the relative strength index (RSI), which reached nearly overbought levels of near 70 on June 12 but quickly reversed on June 13, on very high levels of trading volume. If momentum is coming out of the stock, then it serves as another bearish indication.