AT&T picking up relative strength

A defensive rotation taking place is improving relative strength for AT&T (US: T).

AT&T versus S&P 100 Index

• AT&T underperformed from August 2012 (red arrow) to April this year
• A bullish divergence on the 14 week RSI was formed in December 2014. The April 2015 low had RSI above 30
• The Performance Ranking (PR) within the S&P 100 Index stocks has rallied to 35 out of 100, the highest since May 2013

Trading tactics

AT&T is overbought against a range of pair candidates on the daily chart. Wait for this to unwind over the next week or two, then buy this pair for a medium term trade.

If you are allocating long only money and concerned by this morning’s gap down, you could be excused for increasing your AT&T weighting now, just be prepared for a little pull back on relative.