The PHLX Wireless Telecom Sector (YLS.X) 54.47 -2.27% sinks to a new 52-week low today and continues to exhibit signs of liquidation as many stocks in the group continue to set new lows. There are some approaching levels that traders should be monitoring and a break below the $52 level could see some bulls capitulate and send the sector reeling to its bearish vertical count objective from the point and figure chart which has been hinting at $41 since early May.
Wireless Telecom Index ($YLS.X) - Daily Interval
How low can they go? The point/figure chat's bearish vertical count has been hinting at $41. With retracement and regression overlaid, near-term support can be found near 52.83, but a break much below that could see bulls pulling the plug on a sector where bulls have already taken a bath.
In Friday's market monitor, I profiled a bearish trade in shares of Verizon (NYSE:VZ) $42.91 -0.2% on a break lower at $43.41, stop 45.50 and targeting new 52-week lows. VZ is a component of the Wireless Index (YLS.X) as well as the North American Telecom Index (XTC.X) 522.06 -1.22%.
Several subscribers have asked me if I read this weekend's Barron's article that had some fund managers speaking favorable on the telecom group and my thoughts about the article.
I have not read that article, and today's action has me wondering if the MARKET has either.
Traders short/put Verizon (NYSE:VZ) from Friday's profile in the market monitor that does find some bullish items in the article, can simply close out their positions today with a small gain, or lower a stop to just above Friday's high of $44.58 or today's high of $43.53.