T-Mobile Is in a 'Dead Zone' Between Moving Averages

 | Jul 20, 2017 | 10:42 AM EDT
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We last "called" T-Mobile US Inc. (TMUS) in the middle of February, and we did not get a busy signal. After our review of the charts and indicators we concluded, "The longer-term trend remains bullish, but TMUS is likely to have a correction in the near-term. I would raise sell stops to a close below $56."

From the middle of February prices corrected sideways rather than to the downside. Sideways corrections are more bullish than downward corrections, in my opinion. Why? To me a sideways correction tells me that buyers are willing to enter around current levels as opposed to waiting for weakness to buy.

In this daily chart, above, we can see that TMUS corrected down to the rising 200-day moving average line earlier this month and then started to firm. Prices gaped higher this morning and touched the underside of the declining 50-day moving average line. The gap from the opening might get filled in the next few days. Buying interest (aka support) should materialize in the $62-$61 area.

The On-Balance-Volume (OBV) line turned bullish in November and did not peak until early June. The line has turned up from earlier this month signaling more aggressive buying again. The Moving Average Convergence Divergence (MACD) oscillator crossed to a fresh cover shorts buy signal earlier this month.

In this weekly chart of TMUS, above, we can see how prices have been trading on top of the rising 40-week moving average line in recent weeks. The weekly OBV line has been rising for most of the past three years but it stalled in the past three months. The MACD oscillator is above the zero line but in has been in a bearish configuration since March.

In this Point and Figure chart of TMUS, above, we can see the recent rise without a gap. This chart also shows that the area above $65.43 is potential resistance as there may be longs from that area that might want to "get even" as price revisit the area.

Bottom line: The price of TMUS is in a neutral zone between the rising 200-day moving average line and the declining 50-day moving average line. Prices could work higher but they will have to grind through overhead resistance. A decline and close below $60 will be bearish.

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