TELECOM ISHARES BREAKOUT

BUYING A TELECOM ETF... Last Friday, I wrote a Market Message entitled "Telecom Turnaround". I showed a chart of the AMEX Telecom iShares ETF which appeared to be on the verge of a bullish breakout. I also suggested that the pattern had the look of an "ascending triangle" which is usually a bullish pattern. That pattern is shown again in Chart 1. An ascending triangle is identified by two converging trendlines. The upper line is flat and the lower line is rising. That means that buyers have become more aggressive than sellers. Chart 1 also shows that the Exchange Traded Fund (ETF) has climbed over 22 for the first in eighteen months. In so doing, it has also broken out of the previous basing pattern. The weekly volume bar is the highest in two months. That's a bullish combination. The relative strength line along the bottom of the chart is also turning higher. Several individual telecom stocks have made the headlines lately. As I suggested last week, however, one of the simplest ways to participate in the telecom turnaround is with an ETF like the one shown below. You make one purchase and get an index of the entire sector.

Chart 1