Vodafone's share price has been in a relentless fall, a look at any chart on more or less any time frame shows a series of red with just occasional hints of blue (or green in the case of the charts below), the latest fall this week coming because the market feels that Vodafone overpaid for its Dutch 4G airwave licence. With other countries, including the UK, getting ready to sell their licences there is a feeling that cash strapped Governments will raise the bar as high as they can get away with and telecoms companies like Vodafone will get taken for a ride.
Whatever happens, this is just another in a long line of bad news flow, at least as interpreted by the market, to further hit the share price. However, the warning signs were there in the charts, especially after the share price was up to over 190p a few months ago, a potential top could be seen and since then it's been one of the most slowly grinding relentless sell offs in the FTSE index. Both the Weekly and Monthly chart look pretty ugly. Even worse, the fall looks in its early stages on the Monthly chart. If there is a saving grace for the moment it is that support is at the current 156-158 level and the price has just touched the 200 dma on the Weekly chart.
This is still a falling knife and even though Vodafone is in the market to buy its own shares right now with the Verizon dividend (Vodafone begins buyback), it isn't doing much thus far to prop up the ailing share price. Still, I suppose they might consider they are buying cheap. Charts suggest it might just get cheaper.
Charts:
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| Vodafone Weekly |
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| Vodafone Monthly |
I'm not an expert on candles by any means, but I did overlook to mention that on the Monthly chart for Vodafone it does have what looks like a Shooting Star candle at the most recent high.
ReplyDeleteDefinition - The Shooting Star is a bearish reversal pattern that forms after an advance and in the star position, hence its name. A Shooting Star can mark a potential trend reversal or resistance level.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks#hammer_and_hanging_m
Nomura seem to be suggesting that Vodafone should cut its dividend.
ReplyDeleteNomura has kept its 'neutral' rating for telecoms group Vodafone, saying that the higher-than-expected costs from last week's Dutch spectrum auction raise more questions of the company's 'inflated' dividend.
"Paying an inflated ordinary dividend has been discredited as a way to reward shareholders, it restricts strategic flexibility and it leaves Vodafone dependent on Verizon Wireless cash flows which compromises its ability to negotiate with Verizon. A review of cash return policy is overdue, we believe."
http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=50058&action=news&story_id=20580710