Sometimes the best way to spot new leadership is to notice what is not going down in a weak market. The recent performance of CenturyLink (CTL) has caught our attention.
CTL (chart above) made a low in January and has since pushed to the upside nicely while the major averages have behaved poorly. CTL has rallied above both the shorter 50-day moving average and the longer 200-day average. The slope of the 50-day average has begun to turn up. The On-Balance-Volume (OBV) line has also turned up since January, indicating that buyers are now more aggressive and are buying more CTL on days when it closes higher. The Moving Average Convergence Divergence (MACD) oscillator is rising above the zero line, making a bullish configuration.
This longer-term chart of CTL, above, shows a nice, developing turnaround to the upside. Prices of CTL are now above the 40-week moving average. Notice how the OBV line on a weekly basis went sideways from October until now while prices made a new low for the move down. The OBV line did not confirm the price declines. In the lower panel, the MACD oscillator gave a cover shorts signal and when it crosses the zero line we will have a new buy signal. Traders who raised cash in December and are looking to put money to work in select telecoms (and utilities) could go long CTL on some minor price weakness, risking below $26. Our upside price objective is $34.