Every year about this time we get a telecom and telecom related stock pullback, once the market starts pricing in the holiday season. But this time, could be the BIG SHORT everyone is waiting for who missed the last big short back in 2015 when AAPL fell 30%. (yes Apple is a telecom company)
Notice in the chart below that 100% of the stocks in the telecom service sector are bullish, meaning the majority of analysts were bullish. (see Gold Bag Holders short in my previous posts.) This lead to a nice correction in the sector that lasted over a year. According to my market analysis, we are at the same point where everyone is bullish on telecom and AAPL with a BUY or OUTPERFORM rating and the price action of the stock is "going higher".
But just like in the movie THE BIG SHORT, featuring the housing mortgage crisis, this trade will be tough to stay short through all the bullish sentiment in the sector. But just like the housing markets, those very few who stayed with the short got paid handsomely.
You may not want to short Apple but you don't want to buy it, especially if it goes back to $130 (analyst price consensus). If you want to look for shorts in telecom, look for some dogs, (the ones already selling off or have under-performed their peers).
If you would like more information on how to apply this logic of analysis to your long term and intra-day trading, feel free to email me for a private mentoring conversation. Once you learn how to identify the big picture with logic, you can control the emotional aspects in your day trading.
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