Warnings from telecommunication equipment makers have the likes of Ericsson, Qualcomm, and Motorola lower today. Statements like "the telecommunications sector is unlikely to recover next year," and "we might have a tough time generating an operating profit this year" have investors running for the exits and wondering just when this sector might rebound.
PHLX Wireless Technology Index Daily Chart
The Wireless Technology Index (YLS.X) is one of a growing group of sectors that are setting new 52-week lows. The sector lost support at 95.40 in early August, tried to rebound in late August, and has sold off to start September. Since the Index is just over one year old, support is hard to come by. If we fit a retracement bracket, 79.50 might be a reasonable downside target.
Nextel Communications Weekly Chart
Nextel (NXTL) was consolidating above support at $11.19, but today's $1.30 decline has shattered that support level. Even though Nextel is down 11.55% and setting a new 52-week low, it is off its low. Should NXTL want to move higher, $11.19 should now offer resistance. Support at $7.81 dates back to October of 1998.
AT&T Wireless Daily Chart
AT&T Wireless (AWE) set a new 52-week low last week, but was desperately trying to climb back above $15.30. Today's 6.84% drop makes that unlikely to happen in the near future. Once again fitting a retracement for possible downside targets, $13.82 looks like todays. $12.39 might be the next one.