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Charts Telling A Tale – AXTJ, NWS, and TPM

  • May 12, 2020 12:48 AM AEST
  • Kunal Sawhney
    CEO Kunal Sawhney
    2220 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Charts Telling A Tale – AXTJ, NWS, and TPM

S&P/ASX 200 Telecommunication Index is gaining traction with the index recovering ~ 15.22 per cent from its recent low of 952.80 (intraday low on 23 March 2020) to the present level of 1,097.90. At present, the index is trying to test the resistance level of a triangle at the bottom, and investors should now monitor the development as like many other indices and commodities such as the crude oil, the index is now trading around crucial resistance, a breakout above which or failure to do so would indicate the next move direction of the index movement.

S&P/ASX 200 Communication Services Index on Charts

  • Daily Chart

S&P/ASX 200 Communication Services Index Daily Chart (Source: Refinitiv Thomson Reuters)

On the daily chart, it could be seen that the index is now testing the short-term resistance level of 1,097.90 above which it could move ahead to test the resistance of 1,270.58 and 1,391.00.

S&P/ASX 200 Communication Services Index Daily Chart (Source: Refinitiv Thomson Reuters)

It should be noticed that the index is now forming a triangle pattern while recovering from the recent lows, implying that the communication services market is currently undecisive and is at the verge of a price move.

The pair of the short-term (9/21-day) EMA has given a positive crossover, reflecting on the short-term positive price behaviour of the index; however, while the spread between the pair of the long-term (50- and 200-day) exponential moving average is yet large as compared to the recent past, the pair has not given any positive signal, suggesting that the index could yet turn downside over the medium-term, depending upon the market developments.

Further, the 12,26,9 MACD indicator is indicating a positive signal.

S&P/ASX 200 Communication Services Index Daily Chart (Source: Refinitiv Thomson Reuters)

On applying the Bollinger band to the daily chart, it could be seen that the band is squeezing at the bottom, while the index is testing the +1 standard deviation from the mean value, reflecting lower volatility at present. Also, prices usually retrace to the mean value post testing +-1 SD of the BB.

However, there has been a lot of cases, which we would see ahead in case of stocks where the market action and one-sided sentiments cause the +-1 standard deviation to expand, reflecting a good momentum.

ASX-listed Communication Services Stocks

News Corporation (ASX:NWS)

NWS is an ASX-listed global diversified media and information services company, with businesses across a range of media including news, video subscription services in Australia, and others such as information services, and digital real estate services.

NWS on Charts

  • Daily Chart

NWS Daily Chart (Source: Refinitiv Thomson Reuters)

The stock has recently breached above its short-term resistance level of $16.35, which should act as the support level, and while the pair of the short-term (9- and 21-day) exponential moving average giving a positive crossover, the 12,26,9 MACD indicator is also showing a positive signal, reflecting upon the recent market sentiment around the stock. However, the pair of the long-term (50- and 200-day) exponential moving average is yet apart considerably. Now, the pair of the short-term exponential moving averages should act as support for the stock, while the 200-EMA should be considered as resistance, and a level of significance as per the theory of technical analysis, as market sentiments usually shift below and above 200-EMA/SMA.

NWS Daily Chart (Source: Refinitiv Thomson Reuters)

On applying the BB on the daily timeframe, it could be seen that the stock has breached the +1 SD from the mean value, reflecting on the current upside momentum in the stock. If the stock now sustains above the +1 standard deviation, it could shift the value of +-1 standard deviation ahead. The 14-day Relative Strength Index is trading above the mean value, while the momentum index is reflecting that the stock is poised for a good price move ahead, direction of which depends upon the ability of the stock to sustain above the +1 SD.

TPG Telecom Limited (ASX:TPM)

TPM is an ASX-listed telecommunication company which provides a variety of communication services to residential users, SMEs, government, and whole customers.

TPM on Charts

TPM Daily Chart (Source: Refinitiv Thomson Reuters)

On the daily chart, the price behaviour of the stock resembles that of the index, and the stock is currently trading in a range within a symmetrical triangle.

The pair of the short-term exponential moving average is yet to give any positive signal; however, one interesting observation here is that the price is trading above the 200-day EMA, which coupled with a positive signal from the MACD indicator reflects on bullish sentiments around the stock. However, as moving averages are a lagging indicator, they only tell what has happened rather than what could happen, it could change ahead, depending upon market sentiments.

TPM Daily Chart (Source: Refinitiv Thomson Reuters)

On loading the BB on the daily charts, it could be seen that the band is expanding, while the stock moves above the mean value. During the trading session on 11 May 2020, the stock crossed the mean value of the Bollinger band; however, lost the early gains near the closing time to close below the mean value.

In the status quo, the 14-day RSI and momentum indicators though are sloping slightly up, they are yet below their mean value, reflecting that the stock could face a tough time ahead in sustaining above the mean value.

Gold MTF non-AMP

 

 


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