Investors Disconnect With Verizon After Q1 Report

Verizon Communications

shares are trading lower by $1.54 at $50.21 in Thursday's session. The issue has been under constant selling pressure since it announced inline earnings just before 7:30 AM. Although the issue has backed off from its recent high for move that was made April 5 at $54.49, which coincidentally was one day before it went ex-dividend for $0.57 as part of its hefty 4.51 percent yield, the retreat needs to be put in the proper perspective. From its January 20 low ($43.79), the issue embarked on one of its most impressive rallies since it rebounded from the August 24 Flash Crash. Keep in mind, that was off an artificial low $38.06) that was the result of the lack of liquidity off the open on that chaotic day. The flock to Verizon and other high dividend paying issues was the result of the uncertainly in the overall market when it took a nosedive in January. Investors in search of stability and some yield took to safe havens such as Verzion and other defensive issues. Now that the broad market has showed signs of life, investors were already exiting defensive issues in order to reallocate their funds in the energy and financial sector (which has had a string of solid Q1 reports) and perhaps offer greater upside if the rally continues. Thus, the rout of Verizon off their inline report, should not have come as a huge surprise as the sector had began to fall out of the favor before today's report. At this time, it has been straight down off a lower open and is attempting to stablize in the lower $50 handle, with current low standing at $50.10