T-Mobile: A Clear Strategy in a Fuzzy Market

 | Jul 27, 2017 | 11:36 AM EDT
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Recently we described the technical position of T-Mobile US Inc. (TMUS) as neutral, and gave our parameters to watch: "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."

With Trifecta Stocks holding AT&T Inc. (T) and Verizon Communications (VZ) on the move today a fresh look at TMUS wouldn't hurt. Let's see if anything has changed.

In this daily bar chart of TMUS, below, we can see that price rallied to the underside of the declining 50-day moving average line and then retreated. The 50-day line has continued to decline and the 200-day moving average continued to rise. These two moving averages are getting closer to a possible crossover and possible dead cross. 

The On-Balance-Volume (OBV) line has moved up and down with the price action so far this month and doesn't yet give us a clear idea of what is going on beneath the surface. The trend-following Moving Average Convergence Divergence (MACD) oscillator is pointed back up to the zero line and could cross or fail depending on the price action in the month ahead.

In this weekly chart of TMUS, below, we can see that prices are clinging to the rising 40-week moving average line. It will not take much of a decline to close below this indicator of trend. The weekly OBV line shows a slight improvement so far this month. The weekly MACD oscillator is still in a bearish mode.

This Point and Figure chart of TMUS, below, we can see that the price reversals yield a bearish price target. Gains above $64.78 are probably going to be needed to turn this chart more bullish.

Bottom line: A T-Mobile store is being opened in my neighborhood. As "progress" has come slowly to Hunterdon County, NJ (Starbucks only arrived recently) I am not sure what it says about my local demographics or what that portents for this telco. The charts are clearer, however. Consider going long above $65 and worry about a break below $60.

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