Stock Of The Day: Is AT&T About To Rally?

AT&T Inc. (NYSE:T) shares are flat on Monday. But there is a chance that they are about to head higher.

The shares are oversold and at support, and these can be bullish dynamics. This is why AT&T is the Stock of the Day.

• Where are T shares going today?

If a stock is trending lower, the market is out of equilibrium. There is more supply, or shares for sale, than there is demand or shares to be bought. Traders and investors who wish to sell are forced to undercut each other to draw buyers into the market.

This forces the shares into a downtrend.

When a downtrend reaches a support level, it ends or pauses. This is because there is more demand than supply. Traders can sell all they wish without pushing the price lower.

As you can see on the chart, AT&T has support around the $22.75 level. There is support here because it was a support level in January.

Many of the people who sold at the support regretted doing so after the price rallied.

Some of them decided that if they could eventually do so, they would repurchase the shares at the sale price. When AT&T dropped back to this level, they entered buy orders. These orders created resistance.

The stock is oversold.

This means it is trading below its typical or usual range. This will draw buyers into the market, who will be anticipating a reversal or move back into the range. Their buying could push the price higher.

Stocks tend to rally off support levels. This happens when some of the investors and traders who created the support become impatient.

They begin to outbid each other. This results in a snowball effect that forces the shares into an uptrend.

Being oversold while at a support level can set the stage for a move higher. AT&T may be about to rally.

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