Moving Average Analysis of FEZ’s Telecommunication Industry

FEZ’s bottom stocks

On Monday, December 21, 2015, the stocks at the bottom of the SPDR Euro STOXX 50 ETF (FEZ) were Repsol, Banco Santander (SAN), Telefonica (TEF), Total (TOT), Airbus (EADSY), Orange (ORAN), and Unilever (UN). They returned -7%, -4.8%, -3.4%, -3%, -2.1%, and -2%. Among all of these stocks, most of the stocks belong to the telecommunication industry.

Moving Average Analysis of FEZ’s Telecommunication Industry

Reasons behind the stocks’ performance

Telecommunication stocks like Deutsche Telekom, Orange, and Telefonica yielded negative returns on December 21, 2015.

  • Morgan Stanley (MS) downgraded Telefonica on December 17, 2015, with the expectation of muted earnings. This news hampered the stock’s performances.
  • Orange was fined 350 million euros for abusing its market dominance in France. Orange used anti-competitive discounts to keep business clients from switching to competitors’ telecommunication services.
  • Hungary’s government announced that it will cancel its mobile Internet subscriptions with Deutsche Telekom. The company ended the sponsorship of a woman model. It’s creating gender inequality between males and females.

Telecommunication stocks’ moving averages

The YTD (year-to-date) returns of Telefonica, Orange, and Deutsche Telekom are -15%, 6.4%, and 23.5%, respectively. The stocks’ quarterly returns are -7.4%, 11.4%, and 3.4%, respectively.

  • Telefonica is trading 16%, 14%, and 10% below its 100-day, 50-day, and 20-day moving averages, respectively.
  • Orange is trading 1% above its 100-day moving average, but 4%, and 5% below its 50-day and 20-day moving averages, respectively.
  • Deutsche Telekom is trading 2% above its 100-day moving average, at par with its 50-day moving average, and 1% below its 20-day moving average.
  • All three stocks are trading between an RSI (relative strength index) of 70–30. This means that they aren’t overbought or oversold.
  • Analysts’ estimates indicate upsides of 26%, 15%, and 8% for Telefonica, Orange, and Deutsche Telekom over the next 12-month period from the current levels as of December 21, 2015.

In the next part of this series, we’ll look at the Japanese market’s (EWJ) performance on December 21, 2015.