Telecom turmoil meets satellite expansion — Comcast shine, Verizon decline
Thesis
The telecom sector is in turmoil, with AT&T citing the 'Starlink threat' and Verizon sinking 7% on its Dow exit. The legacy communication model is being disrupted by satellite networks. At the exact same time, Rocket Lab is acquiring Iridium (a satellite network) for $8 billion to expand beyond just launches. This combination captures a generational shift: money is flowing away from 5G cell towers and into low-earth orbit satellite constellations. We want to be long the space infrastructure and short the legacy telecom providers.
Strategy approach
Build a pair trade strategy to capture the 'Space vs. Terrestrial' telecom war. Enter long RKLB (or a space ETF like UFO) and short VZ on the D1 timeframe. Enter when the 20-day moving average of RKLB slopes upward AND VZ's 20-day moving average slopes downward. Exit the trade if the 50-day correlation between the two assets breaks down (becomes highly positive). Use a 10% stop loss on both legs.