Killer Trade: Telkom, TFG

Finweek English Edition - - Contents -

telkom, the semipri­va­tised in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy (ICT) ser­vices provider, has over 3.5m tele­phone ac­cess lines and over 1m in­ter­net ports ser­vic­ing busi­ness, res­i­den­tial and pay­phone cus­tomers. Telkom is 39% state-owned and cur­rently oper­ates in more than 38 coun­tries across the African con­ti­nent. Telkom’s share price ex­celled from 2013, when cur­rent CEO Sipho Maseko was ap­pointed, af­ter re­vis­it­ing a prior low at 1 130c/share, and tested a high at 8 580c/share in 2015. In 2013,Telkom also dis­posed of its 50% stake in Vo­da­com. Upon ar­rival, Maseko im­ple­mented an in­ten­sive, well-an­tic­i­pated turn­around plan aimed at cut­ting R1bn in costs per year. Out­look: Af­ter form­ing a lower top at 8 250c/share in May 2017, Telkom lost some of its gains to­wards sup­port at 4 160c/share, as the tech and tele­com sec­tor strug­gled in cur­rent eco­nomic con­di­tions.

On the charts: Cur­rently range­bound be­tween 4 160c and 5 825c/share, Telkom is trad­ing in a sym­met­ri­cal tri­an­gle.

Go long: A move above 5 825c/ share would con­firm a pos­i­tive break­out of the tri­an­gle – thus trig­ger­ing a buy sig­nal.The shortto medium-term tar­get of this pat­tern break­out would be at 7 815c/share. Signs of a bullish break­out would be pend­ing if the three-week rel­a­tive-strength in­dex (3W RSI) con­tin­ues to trade above the up­per slope of its own tri­an­gle in Novem­ber. Po­si­tions could be in­creased above 6 885c/share.

Go short: A neg­a­tive break­out of the tri­an­gle would be con­firmed be­low 4 600c/share, with the down­side tar­get sit­u­ated at 2 610c/share. ■

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