(Premium) February Communication Services Outlook

For the first time in over a year, we are forced to question whether the Communication Services sector is still in a downtrend. The group has been the unquestioned laggard on the downside since September 2021, but an impressive rally to start January has them breaking through the relative downtrend line from those 2021 highs.

Still, they’re below the October/November capitulation breakdown level from last year.

On an absolute basis, the rally has been equally strong. But we’re still below the summer breakdown. A few more days of sustained strength would give us more confidence in this being the start of a new uptrend. In any case, be believe the downtrend has run its course.

Omnicom is nearing a breakout, and we want to be long above 85 with a target all the way up at 108.

T-Mobile is another that we’ve had our eye on. If it’s above 150, we think it’s headed to 178.

For the sector to really get it’s mojo back, though, it’ll need participation from the big boys.

Alphabet needs to get above 100.

And we want to see Netflix above 400.

For Meta, the level is 160.

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