Analysis: VZ

In Friday's  Action Alerts PLUS Daily Rundown, Bob Lang explains what the oscillators indicate as markets seek direction Friday.

He also discusses what the latest PMI reading says about the economy and reacts to  earnings from Verizon ( VZ) .

BOB LANG: Good morning, Action Alerts PLUS members. It's July 22, 2022. And as we close out the week, I wanted to share with you a little bit of what I'm watching here. So the technicals are starting to improve a little bit with the markets. And we're seeing a little bit of a up move today following a couple of strong days, Tuesday, of course, being the strongest day of them all. And we followed through a little bit on Wednesday and Thursday.

But a little warning sign here, a little danger, in fact, that the oscillators are quite a bit overbought right now. And what does that tell us? It tells us that a lot of buyers are coming in. And eventually, the buyers are going to stop, and the seller is going to step in there and start taking over a little bit.

Remember, this is still a bear market until further notice. And we have to pay attention to price levels. Not only that, but also the indicators that tell us when markets are overbought. And we can expect to see some selling come in.

That's not a tragedy, of course. We've seen some good breadth over the last week, week and a half. Put call ratios have been coming down. So some of these indicators here are telling us that there's some more upside to be had. Of course, in the month of July, we have another week left to go before that ends, before we start in August trading. And 5.7% upside already. So for July and the S&P 500, that's pretty strong. We don't think that that's going to hold to the end of the-- end of the month. So we could recede a little bit and pull back a bit, maybe 1%, 2% before the end of the month. We do have a big week of earnings coming up next week, and we also do have a Fed meeting in the middle of next week as well. So just brace yourselves. It's going to be some volatility over the next several days.

On the earnings front, one of our names that we have in the Action Alerts Plus portfolio, Verizon reported their earnings this morning. And they came in-line on revenues, but missed a little bit on the bottom line.

We still like this name, even though the stock is coming down quite a bit. It did actually come down quite sharply yesterday after AT&T gave a warning. And of course, they're their major competitor, along with T-Mobile. T-Mobile will come out next week, and we'll hear what they have to say. But as far as Verizon is concerned, they did cut their numbers for the rest of 2022 quite a bit.

And they did see subscriber growth slowing due to the fact that consumer constraints with spending are starting to hit. And that should be no surprise with a slowing economy coming over the next couple of months and especially if jobs starting to soften a little bit. People are going to be spending less money on stuff like wireless. So I think it's a good warning flag from Verizon.

They're taking a much more conservative view of spending for the next six, seven months. And hopefully, we can get a nice run with Verizon. But in the meantime, yielding a nice dividend of about 5.4%. So we'll be happy to get paid while we wait.

So as far as the economic data is concerned, something that we noted this morning is the PMI data came out slightly negative versus last month. Came in at 52.3. But the more glaring miss was in the manufacturing and services area. Came in at 47, which actually tells us that the economy is contracting in terms of PMIs. And this is the Chicago area that came in with the light numbers.

We also saw some PMIs from Europe as well too that came in quite sharply lower. Germany is actually in contraction as well too. So this is something that we have to pay attention to. This is something that, over the next several months, could permeate and come through the economy and cause a little bit more softness in there.

Something that was not totally unexpected, but certainly, we have to pay attention to this. If the economy starts slowing down in the manufacturing area, we're going to have-- we're going to have much more problems to deal with in terms of recession area-type numbers. So on that note, let's have a good trading day. Have a great weekend, and we'll see you on Monday.