TELECOM LEADERS -- SPRINT AND NEXTEL HIT FIVE-YEAR HIGH -- BLS AND SBC TURN UP -- VERIZON NOT HELPING MUCH
SPRINT REACHES FIVE-YEAR HIGH ... Sprint is the day's biggest percentage gainer in the telecom group. The daily bars in Chart 1 show FON surging to a new 52-week high on rising volume. The monthly bars in Chart 2 show the telecom leader reaching a new five-year high. Nextel also hit a new five-year high. But that's not where the new telecom leadership is coming from. It's coming from the bigger stocks like Bellsouth and SBC Communications.
Chart 1
Chart 2
BELLSOUTH SURGES ON STRONG VOLUME ... Bellsouth is one of the big three stocks in the Telecom Holders. It accounts for 14% of the ETF. [The two bigger holdings are SBC and Verizon]. So its trend carries a lot of weight in the TTH. That's a good thing because the stock is rallying very strongly. The daily bars in Chart 3 show BLS climbing to a new 2005 high on rising volume. It's nearing a challenge of its late 2004 high at 28. Its relative strength ratio, which bottom during March, is also showing signs of turning higher. The weekly bars in Chart 4 paint an even stronger picture. They show that BLS has just broken an eighteen-month down trendline. Chart 4 shows a possible higher target at the early 2004 peak near 30. The relative strength ratio is moving up to test a two-year down trendline.
Chart 3
Chart 4
SBC EXCEEDS 200-DAY LINE ... The daily chart of SBC Communications most closely resembles the chart of the Telecom Holders (TTH) that I showed earlier today. That may be due its heavy weighting in the TTH (23%). The daily bars show SBC trading at a six-month high and having climbed back over its 200-day moving average. The weekly bars in Chart 6 show SBC having just bounced off the bottom of a year-long trading range near 22. It appears headed to the top of the range near 26 which is marked by two 2004 peaks.
Chart 5
Chart 6
VERIZON ISN'T HELPING MUCH ... One of the big reasons for this year's weak performance by the Telecom Holders can be seen in the chart of Verizon. Although the stock bounced today, it hasn't provided much help to the TTH. Why that's important is because Verizon is the largest holding in the Telecom Holders at 29%. That gives it a lot of influence. Even without much help from Verizon, the Telecom Holders had an impressive chart day.
Chart 7
