Chart of the week: Where to take profit in Telstra

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The run up on Telstra (TLS) has been wonderfully spectacular for us. On Tuesday, on a day where the market was spooked and fell 0.7%, Telstra had a high of $3.75, closing up 1.9% at $3.71. That’s a 2.6% outperformance!

If you had followed my recommendations, you would have accumulated Telstra at:

  1. $3.31 in morning of 19 April 2012; and at
  2. $3.39 afternoon of 19 April or the morning of 20 April.

You should have also locked in at least 30% of your profits by now.

On 9 May, I said in point three, under ‘What I don’t like about the chart’: “There are no signs to sell yet here at the time of writing, but as soon as it appears, say a close below $3.62, or on hitting my little ‘r’, which is first resistance at $3.73, whichever comes first, one ought to take some money off the table. Say 30%.” (You can re-read Chart of the week: take profit in Telstra?)

At the time of writing on Tuesday, the holding is now 30% sold since closing at $3.60 on Friday 11 May, below the $3.62 mark. If you sold a bundle of Telstra at this level, this would have locked you in for a profit of between 8.7% and 6.2% in under a month.

On Tuesday, it hit $3.75, breaking the first small ‘r’ resistance level of $3.73. One should have taken profit on another 10% of holdings at $3.73, pocketing gains of 12.6% and 10%.

Above is the updated Chart. The stock has traded as expected.

We are headed towards the two large ‘Rs’ on the Chart and these represent $3.86 and $3.99.

If you followed my recommendations, you would have holding of about 60% left. Take profit:

  1. on another 30% at the first ‘R’, $3.86; and
  2. finally, closing out any remaining positions at $3.99 if it keeps shooting to this second ‘R’ before I can update readers.

If you watched SWITZER on Sky Business last Thursday, you would have seen my Sell In May and Go To Bahrain interview.

I am holding to that interview’s view that I expect a more significant pull back in the broader markets in the coming weeks and months. We have begun to see that view play out this week.

While Telstra should hold up relatively well in this expected turmoil, I believe there will be a better time to buy if one has the chance to exit at the above stated levels and lock in what are very good profits.

I am hoping in the coming days to sell all of Telstra, as I will be off to Bahrain.

Other calls

The other holdings not closed based on prior articles are:

  • 12 March 2012: Spark Infrastructure (SKI) $1.655, buy. Now $1.515. Up 11%. Continue to hold.
  • 19 March 2012: Envestra (ENV) $0.771, buy. Now $0.785. Up 2%. Continue to hold.

Hopefully, these stocks will also present irresistible higher prices in the coming days in May, so we can sell. For now, they remain “Steady as she goes stocks”.

Important note: My views are NOT for the long term. My method results in views expressed that relate to an outlook that lasts weeks or at most months. For example, my view on Shanghai’s Index has for now been met and completed since 22 March 2012, 11 days later. Currently regards Shanghai, I am in a cautionary observant position. Your utilisation of this information needs to take into account the time frame I set. The stocks recommended as “Steady as she goes” may be held for the longer term, which for me means months.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should, before acting, consider the appropriateness of the information in regards to their objectives, financial situation and needs and, if necessary, seek professional advice.

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