TEN worth a “toe hold” position on dips

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If the premise is correct that we are about to enter a “risk on” phase over the next 12 months, then stocks that are down and out with outlook prospects that can dramatically change ought to be considered. “Toe hold” positions may be established to see if the pull-back materialises.

The chart of the week is a controversial one, TEN Network.

You will see on the chart marked:

P (for Peak) On 29 March 2010 the stock was at $1.47, the recent high. In just under two years the value of the company has fallen by 85% to a low of 22c on 20 October 2012. At 37c it has lost 75% of its value from this recent high.

UP (for Ultimate Peak) On 10 January 2005 the stock was at $3.41. In eight years it has lost 94% to the low point of 22c or at current levels of 37c, lost 89% of that longer term high.

The chart begs the question, should TEN exist? On its own, the answer is probably no. It has lost value from March 2010, even when most other companies were recovering as Government stimulus packages were being being doled out around the world.

The company has some serious structural challenges from within. However, if you factor in Packer and Rinehart on the share register, then it is unlikely they will allow the company to simply be wound up without a good fight.

On that basis, and on the basis that the technicals are showing a bottoming formation, with seven bullish indicators compared to four bearish ones, it is worth considering, “Has this stock bottomed?” Technically, the answer is, “It’s looking positive and worth a toe hold position.”

While a very different animal, I am reminded of, and reviewed, the Telstra chart in comparison.

Foreseeable higher levels are marked by yellow lines with “T” next to them and are:

  • 43c – up 16%
  • 48c – up 30%
  • 57c – up 54%

Good entry levels to consider would be:

  • 34c
  • 32c
  • 30c

Falls below 28c (24% lower) should be viewed with caution and stop loss selling ought to be considered.

Bearish indicators

  1. 200-day moving average still pointing down.
  2. Since 20 Feb had a run of 32% from 28c to 37c now. This is a very strong run and arguably could see profit taking and hence a pull back.
  3. Since the all time low of 30 October 2012 at 22c, the stock has now run up 68% in four months! Another argument for profit taking.
  4. Most daily indicators are at the top of their ranges confirming a need for a pull back.

Bullish indicators

  1. 200-day moving average crossed from below.
  2. 28c represented good support buying. It confirms the upward trend currently in place is strong and technically as expected.
  3. A bottom formed over the last eight months between June 2012 and 20 Feb 2013.
  4. A longer term bottom is arguable from March 2009. These two bases are marked on the chart.
  5. A new uptrend appears to have begun as indicated across both daily and weekly time frames.
  6. Further rises are likely, provided the overall premise of a recovering global economy holds true.
  7. 10- and 50-day moving averages have crossed from below

Important: 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. Consider the appropriateness of the information in regards to your circumstances.

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