Comcast Corporation (CMCSA) appropriations jumped more than 3% in the minutes following Wednesday’s pre-market earnings release, lifting the communications giantess back to the 50-day exponential moving average (EMA), which was broken earlier this week. The company beat profit requirements by a penny per share, while revenue rose 26% year over year, highlighting impressive growth that has promoted from domestic exposure during a period of worldwide trade tensions.
The stock has been a superior performer for years while get back at out a modest yield that has now risen to 2.12%. Comcast announced a 10% increase in the 2019 dividend as part of the first earnings release, underpinning the solid buy-the-news reaction. Even so, adverse cycles could now limit upside, context the stage for a second tough year in a row after the stock posted a 15% negative return in 2018.
CMCSA Long-Term Tabulation (1990 – 2019)
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The stock fell to a two-year low at a split-adjusted 85 cents in 1990 and turned higher, entering a strong uptrend that topped out at $4.70 in 1993. The ensuing decline ended nearly three years later, yielding a second and more powerful uptick that bagged fire during the internet bubble. Buying interest ran out of steam in the upper teens during the last week of 1999, hang up a high that wasn’t challenged for the next 13 years.
Comcast shares fell into the single digits when the effervescence burst, bottoming out at $5.68 in October 2002, ahead of a limp recovery wave that stalled at the bear superstore’s midpoint in 2003. A 2006 breakout made limited headway, topping out more than three points less than the 1999 high in January 2007. The subsequent downturn accelerated during the 2008 economic collapse, while supply pressure eased at 2002 support in March 2009, marking a historic buying opportunity.
A bounce completed a wrangle trip into the 1999 high in 2013, yielding an immediate breakout that attracted widespread buying pastime. The rally’s trajectory eased in 2014, but a long string of higher highs and higher lows continued into January 2018’s all-time high-frequency in the mid-$40s. The stock broke a 14-month double top in March and bottomed out at the 50-month EMA two months later, completing the first try out of that level since 2011. Unlike many issues, Comcast held above the mid-year low into year end, disclosing resiliency that could eventually yield a fresh bull market run.
However, the monthly stochastics oscillator met into a sell cycle in December, predicting at least six to nine months of relative weakness that could shut in the stock trading around the 50-month EMA into the second or third quarter. The sell-off into May also ended within 50 cents of the November 2016 low, highlighting the exigency for bulls to hold the line at $60 or risk continued downside that targets the January 2016 low in the mid-$20s.
CMCSA Short-Term Table (2016 – 2019)
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The 100% retracement into the November 2016 low raises a red flag because it marks the first failure to plead for the long-term uptrend since the August 2015 mini
The Bottom Line
Comcast stock has bounced back to the 50-day EMA after an sanguine earnings report and could add to gains in the coming weeks. However, adverse cycles suggest that hidden headwinds transfer keep many bulls on the sidelines into the second quarter.
Disclosure: The author held no positions in the aforementioned custodianships at the time of publication.