Why I Bought a $h!tload of $VZ at Friday's Close

So as you can probably gather by title I got long Verizon ($VZ) at Friday's close. I just wanted to briefly outline my reasoning behind the trade. First and foremost, are the technicals. I consider myself a technical trader, and so hence, it was the technical price action in the stock that first attracted me. As of Friday's close (5/16/14), the stock is now above all major moving averages on all time frames. It also appears to have broken above a descending trendline on the daily chart. The chart below is an automated chart from finviz:

VZ, daily chart

Technically, I only want to be in the stock above $46 or so. Specifically, my stop is a closing stop loss at 4/25's closing price of $45.94, which also happens to correspond to a weekly close as well. A close below this level would also require a break below all major moving averages and would also invalidate its break above the down trend. Based on Friday's close, this represents a $3.13 (~ 6.37%) stop loss. While this may seem like a relatively wide stop loss, a stop loss less than 7% is consistent with my long-term time horizon of this particular trade. Despite the melodramatic nature of this post's title, I'm not really risking significantly more in this trade from the next. I've simply adjusted my position size to account for my stop loss. It's all about knowing the perspective of a trade and knowing your risk on multiple time frames.

In addition to the constructive technicals of the stock, there is also some fundamental data that I believe makes this a more attractive trade here. Now, I'm not a fundamental trader and rarely, if ever, do I base my trading on fundamental analysis. I've got nothing against its use, but I just don't use it in my trading. With that said, though, I did notice that VZ has a relatively low P/E of 10.98 and a forward P/E of 12.74 (according to finviz.com). In addition, the stock also has a 4.3% dividend yield, which can provide a decent cushion given the expected longer holding period of this trade (the 10 year only pays 2.5%). Also, given the current market environment of large caps and the like being bid up, I think this low P/E, high dividend yielding name could also benefit from what we're seeing in the market right now. While the use of this fundamental data may seem like I'm merely proving the theory of confirmation bias, I'm simply trying to consider ancillary factors that could drive other market participants actions.

If I'm wrong, I'm wrong and I take my loss. Plain & simple. I won't discard my trading discipline for the sake of trying to uphold my egotistical and narcissistic need to be right.

If you have any questions or comments, please just let me know in the comments section below. You can also follow me on StockTwits and Twitter.