Mixed trading dominated Wall Street on Wednesday as investors digested conflicting data. On the bright side, U.S. housing data welcomed the bulls after the September housing starts figure blew expectations out of the water; this reading came in at 872,000, well above estimates of 770,000 as well as the previous month’s figure of 758,000. On the other hand, dismal earnings kept a lid on investors’ confidence; bellwethers Intel and IBM both missed the mark, inviting profit-taking pressures into the tech-sector [see Free Report: How To Pick The Right ETF Every Time].
Aside from China GDP, corporate earnings should remain at the top of the headlines today as more industry leaders report results and set the tone. Telecom-giant Verizon Communications (VZ) is slated to report later today at the opening bell, which brings the spotlight onto the Vanguard Telecom ETF (VOX, A+); this fund will likely see an increase in trading activity seeing as how Verizon holds the top spot in its portfolio, with 22% of total assets dedicated to this stock [see also High Tech ETFdb Portfolio].
Analysts are expecting for Verizon to rake in revenues of $28.98 billion for the quarter along with earnings of $2.48 per share for the fiscal year. Investors have clearly expressed their concerns over the upcoming performance report as shares of VZ have slid lower every single day since October 5 of this year. VOX has been on a tear all year, even managing to climb higher within a steep trading channel (blue lines) since early June. This ETF has been consolidating sideways for the past few weeks, which suggests that bullish momentum has cooled off, although it might still be too early to pull the “sell trigger” for longer-term investors [see 101 ETF Lessons Every Financial Advisor Should Learn].
At current levels, entering into a long position in VOX presents an opportunity to tap into attractive upside while still being able to closely manage downside risk, given that this fund is trading near the bottom-half of its range [see also ETF Technical Trading FAQ].
If Verizon can impress the street with its latest quarterly performance results, the telecom sector as a whole could rally higher on the day; in terms of upside, VOX has major resistance around $76 a share. On the other hand, disappointing results from this industry juggernaut may set a bearish tone for the day; in terms of downside, this ETF has immediate support at $74 a share followed by the $72 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
Follow me on Twitter @SBojinov
Disclosure: No positions at time of writing.