(Premium) January Communication Services Outlook

The relative downtrend in Communication Services remains intact. Momentum is still in a bearish range, and prices have yet to set a higher high or challenge the downtrend line from the 2021 peak.

On an absolute basis, it’s the same story. It looks like we’ve worked off the bullish momentum divergence from October, and this consolidation should resolve in the direction of the underlying trend. There’s simply no reason to be bullish on the sector unless we’re above the October highs.

Meta has nearly closed the gap down from the fall, but it’s stuck below quite a bit of overhead supply.

Alphabet is closer to setting new lows than it is to setting a higher high.

In any case, these are downtrends we don’t want to touch, and we continue to believe underweighting the sector is the best approach.

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