Is Telstra now a Buy for Retail Shareholders?

I wrote a post “Ten Years of Telstra” nine months ago, pointing out that the giant telco was hovering near historic lows, and had been a proverbial dog from a consumer’s perspective.

Little has changed for shareholders since then. The downwards momentum has petered out with the share-price action penetrating the down-trend; and the share-price has entered into a trading range between support at $2.62 and resistance at $3.24. i.e. Zone E, since 29/03/18.

5-year weekly candlestick chart for Telstra from Metastock.

5 year weekly candlestick chart for TLS

Retail investors who see value in Telstra at these prices should not be put off by the absence of a change in trend thus far. Technical analysis suggests that the longer the share-price remains flat, the greater the lift in the share-price when break-out eventually occurs.

Unlike retail players, institutional investors in large-cap stocks such as Telstra, need to accumulate their large parcels of shares without stimulating a rise in the stock-price. Thus they set target prices above which they stop buying, and a price-range in which they are happy to buy.

Personally I have been reducing my Telstra holding until now, but now intend accumulating shares. I would emphasize however, that readers should not blindly follow my example without first seeking the advice of their stock-broker or financial advisor.

Categories: Chart Review


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