Telephone & Data Systems Could Surprise on the Upside

 | Jan 08, 2018 | 8:55 AM EST
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This morning I am looking at a telecom that is not a household name but shows a large and potentially very bullish base pattern: Telephone & Data Systems Inc. (TDS) . Looking at a chart going back to 2001 we can see that TDS could emerge from a nine-year base pattern. Let's drill down through the charts and indicators to see the bullish potential for TDS.

In this daily bar chart of TDS, below, we can see a low last March and a retest in November. Prices are currently above the now rising 200-day moving average line and above the still declining 50-day line. Even though prices lost some ground the past 12 months it is real interesting (read bullish) that the On-Balance-Volume (OBV) behaved so strong since March. In the past month the OBV line has moved up to a new 12-month high, telling us that buyers of TDS have become more aggressive and this buying could well be foreshadowing new price highs from TDS in the days and weeks ahead. In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator, which recently turned above the zero line for an outright go long signal.

In this first longer-term weekly bar chart of TDS, below, we can see that prices are just above the now rising 40-week moving average line. Prices have been in a large sideways pattern with weekly OBV line roughly moving up and down with prices. The weekly MACD oscillator just crossed to the upside for a cover shorts buy signal.

In this monthly bar chart of TDS, below, we can see a long base pattern for this stock going back to late 2008. Part of the logic behind technical analysis talks about relativity. A long base can potentially support a long rise. Notice the bullish movement in the monthly OBV line since 2012.

In this weekly Point and Figure chart of TDS, below, we can see an upside price target of $32.48, which would be a longer-term breakout on a Point and Figure chart and the monthly bar chart above.

Bottom line: Do your fundamental research on TDS and then consider buying strength above $29 and $30, risking below $27 for now.

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