Monday, November 05, 2012
Telcos- under selling pressure
Last Friday, TM, Axiata & Digi dropped sharply. Digi dropped from RM5.33 to RM5.14 while TM dropped from RM5.93 to RM5.67. Axiata gapped down when it opened at RM6.40 from Thursday close of RM6.48 & lost 32 sen on Friday to close at RM6.16. Meanwhile, Maxis also dropped from RM6.97 to RM6.92.
TM has clearly broken its uptrend, if we use either the 50 or 100-day EMA line as the trend line. Axiata is on the verge of breaking its uptrend line, as it is now below its 50-day EMA line but still above its 100-day EMA line. Digi is resting on its 50-day EMA line.
This sharp drop in 3 of the biggest telcos signals the correction for the sector, which had enjoyed a good run for the past 1 year. The immediate support for Axiata, Digi & Maxis are RM6.15, RM5.00 & RM6.70. TM, which has broken its uptrend line as well as its strong horizontal line at RM5.80, must stage a good rebound soon- possibly from the psychological RM5.50 mark.
Those who are looking to buy on this correction, can consider entry at the immediate support level, with the exception being TM. That stock broke its uptrend and the RM5.50 psychological level may not be a good support. Since all these stocks had rallied substantially over the past 1 year, this correction may last for a while. So, buying if any should be gradual, not aggressive.
Chart 1: TM's daily chart as at Nov 2, 2012 (Source: Quickcharts)
Chart 2: Axiatas daily chart as at Nov 2, 2012 (Source: Quickcharts)
Chart 3: Digi's daily chart as at Nov 2, 2012 (Source: Quickcharts)
Chart 4: Maxis's daily chart as at Nov 2, 2012 (Source: Quickcharts)
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, TM, Axiata, Digi & Maxis.