One of these stocks is not like the other

bcet

 

 

 

 

 

A reader asked me for a commentary on Canadian telecoms. To cover this sector, I will be looking at the “Big 3” in today’s blog. Please feel free to comment below if you would like any of the Canadian or US sectors covered in a future blog.

Canadian telecoms are not all the same, insofar as investors are concerned. For example, BCE and Telus, whose long termed charts are shown above (click on chart for better detail), are in an uptrend on the weekly charts, although both show a consolidation pattern over much of the summer.

bce nearterm

As we can see on BCE’s daily chart above (which displays a similar pattern to Telus), support is holding at this time. BCE has bounced off of $48 twice, which is above its prior low of $47.50. So long as $47.50 is held, the stock should be considered in a consolidation pattern. In this case, it appears that BCE is in the early stages of forming a descending triangle.

I’ve discussed in past blogs this pattern and the mythology that surrounds it. Some technical analysis textbooks suggest that descending triangles are bearish –  I have not found that to be the case. The important thing to watch in any consolidation is a break through either support or resistance. Support on BCE is around $48, and resistance comes in at the descending trendline – which you will have to keep track of as time marches forward. If one of those lines is broken on high volume for more than 3 days, you may have the beginnings of a tradable move. In the meantime, BCE is a hold if you own it, and a “watch” if you don’t. Same goes for Telus. Support on Telus comes in around $37, by the way.

rci.b

Rogers, on the other hand, is NOT in an uptrend, as seen on the above weekly chart. The stock is clearly stuck in a giant symmetrical triangle. Trading such a formation is very straight forward: Long term buyers should avoid RCI.B until a volume-lead breakout through about $45 occurs. A breakdown below $42 on volume would suggest a shorting opportunity. Between those levels, the stock remains in Never-Never land. Avoid RCI until the stock breaks out of this triangle.

My pal Brooke Thackray, seasonal expert and all-around nice guy, tells me that the seasonal tendencies for telecoms are a bit “fuzzy” given the changing nature of the sector (deregulation, mergers, etc) –this would apply to stocks on both sides of the border, I would think. Nonetheless, he does see a tendency for some outperformance in the US telecoms in December – again, I wouldn’t be surprised if this tendency was mirrored here in Canada.

Attention Investment clubs and corporate groups

We’ve been booking speaking engagements for groups of 20 or more throughout Ontario. If you would like Keith to speak to your corporate group or investment club, please contact [email protected]

Topics may include:

  • Retirement and income planning
  • Creating an investment strategy that works for you
  • Technical analysis workshop
  • Fusion Analysis: Combining technical and fundamental analysis

 

8 Comments

  • Keith,
    Thanks again for the technical analysis on the Telecom sector. If possible could you take a look at the oil and gas drillers. They are not all the same either, but some like PD.to and TDG.to are showing signs of a rally. What do you think?

    Thanks, Ron

    Reply
    • Will do Ron–I am posting a broad market commentary next Tuesday, then I’m away for the balance of the week and will look to cover drillers the following week. This is assuming I come back in one piece (off to mountain bike in the west coast mountains!)

      Reply
  • I’m wondering about your use of the word “mirrored” in relation to the telecom industry here and in the US. I’ve seen this many times by many writers but it seems to me that a mirror image is the opposite to the first one. Surely you don’t mean that the Canadian industry will be the opposite to the US.

    Incidentally, I have been watching Telus for some time looking for an entry point and took the leap last week. There were some doubts, mostly the CMF (still is but improving) but it seemed the “weight of evidence” was on the positive side.

    Hope I’m not wrong on either of my comments.

    Reply
    • Semantics, Fred–I mean “the same” when I say mirror. But yes, technically you are correct
      Telus looks like its in a big uptrend, and looks to have taken the “pause that refreshes”

      Reply
  • The DJIA has a double top formation and the S&P has a doji formation the last few days. Could be the start of a pullback.

    Reply
  • Keith,
    Sounds great! Looking forward to your broad market overview as well. Enjoy the mountain biking trip and the last bit of summer.

    Reply
  • DOW /GOLD RATIO AND POSSIBLE MARKET TOP?

    IS THE DOW/GOLD RATIO A SIGNAL FOR A MARKET TOP? AT THE MARKET TOP IN 2000, THE DJI/GOLD RATIO WAS 44.2. SINCE A LOW IN AUGUST 2011 AT 5.7, THE DJI/GOLD RATIO HAS GONE UP 132% OR 7.6 POINTS. THE DJI/GOLD RATIO APPEARS TO BE FORMING A SYMMETRICAL TRIANGLE AND IS CURRENTLY AT RESISTANCE. BREAKOUT OVER 13.4 FAVOURS THE DOW AND A BREAK DOWN UNDER 12.5 FAVOURS A SHIFT TO GOLD. WHAT IS YOUR TAKE ON THE SUBJECT?

    HAPPY LABOUR DAY!

    Reply
    • Good question JP
      I’ve written before about a broad market commodity cycle (which is 33 years peak to peak—the last one was in 2011, thus we should be in a bear for the broader index for another decade). So the only way to play the “big” commodity sectors (energy, precious metals) is to trade short termed. Gold is bearish unless it breaks $1330, silver needs to bust $22. Doesn’t look like that’s in the cards right now–so I’m not trading–despite the gold/gold equity ratio that many (including Brooke Thackray) have noted in their research.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

seventeen + 3 =

Topics

Topics

Recent Posts

gold

Gold oversold: Time to be bold, or should it be sold?

TAN

Green energy stocks extremely overbought

dow theory

Bear-o-meter neutral, with some caveats

gsci

What does a commodity bull market look like?

pink_flamingos_1050x700

Short termed momentum indicators suggest a minor correction pending

hun

Nat. gas holds opportunities for traders

cta-bg

Never Miss an Opportunity

Sign up for our newsletter to receive valuable insights that are available only to subscribers.   Beyond the blog – beyond the videos – get the inside scoop.

Scroll to Top