Telecoms were highlighted in an earlier story on the three sectors that are likely to outperform in the fourth quarter. One could zero-in to the sector with an exchange-traded fund or a sector-specific mutual fund or one can drill down to specific names.
When you think about telecoms, you have to think AT&T (T). Notice in the chart above how $32 has been key for T. In 2011, the $32 level was key resistance on T. Resistance reversed roles and became support in 2014 and 2015. The $32 level is still holding and the stochastic indicator is coming up from oversold.
Nokia (NOK) is a telecom name better known across the pond than across the street. Prices have drifted down to $6 from just above $8. The stochastic indicator (an overbought/oversold tool) is rising from a higher low and giving off several buy signals. A higher low on the stochastic indicator versus a lower low or equal low in the price is a bullish divergence and tends to foreshadow higher prices ahead.
Neither security is that bullish looking, but the idea that telecoms have ended their down phase sounds good to me. It is going to take six or seven sectors going on the upside to kickstart this market, but I'll take three for now: telecoms, utilities and energy.