(Premium) April Communication Services Outlook
(Premium) April Communication Services Outlook
Throughout most of 2022, Communication Services was one of the worst places you could put your money. But when the sector broke down to new lows in November, momentum failed to confirm the selloff, signaling a bullish divergence. Our view on momentum divergences is that they usually lead to mean reversion rallies. Those mean reversion rallies sometimes lead to trend reversals.
This was one of the ‘sometimes’.
Communications has set a series of higher highs and higher lows. Momentum is in a bullish range (gets overbought on rallies and stays well out of oversold territory on pullbacks). And prices are back above the spring 2021 lows. This is not what downtrends look like.
How much upside is left in the near-term depends on how the biggest stocks in the sector respond to major resistance. Meta is back to its 2018-2020 highs. It would be surprising if the stock just blew right past this level without a problem. The better question might be how much time it takes to absorb this overhead supply, and how far prices fall on any pullback.
Alphabet, too, is at a key level. 107 was resistance in early 2021, support in the summer of 2022, and then resistance again over the past 6 months. Can it surpass that level on a fourth attempt? We’ll have to wait and see.
We don’t have to wait and see for Omnicom. OMC is a recurring guest on our sector outlook, and for good reason. It just set new 52-week highs again. Our target is still 108.
Not all of the sector looks so bright. Dish and Lumen are still stuck long-term downtrends.
View the rest of our April outlook:
April Technical Market Outlook
(Premium) April FICC Outlook
(Premium) April Information Technology Outlook
(Premium) April Communication Services Outlook
(Premium) April Consumer Discretionary Outlook
(Premium) April Industrials Outlook
(Premium) April Financials Outlook
(Premium) April Energy Outlook
(Premium) April Materials Outlook
(Premium) April Health Care Outlook
(Premium) April Consumer Staples Outlook
(Premium) April Real Estate Outlook
(Premium) April Utilities Outlook
The post (Premium) April Communication Services Outlook first appeared on Grindstone Intelligence.