On closer inspection of the chart, I have a nagging suspicion that something is going to hit TLS from left-field. For institutions to be selling out truck loads at record lows when only a few months back they were hoovering them up at anything between 2.90-3.10, they must have bells of steel. There must be a compelling reason which goes beyond presently known facts.
Presently known facts are:
1. Continued uncertainty about NBN, will it happen, will Telstra get the dough under that deal, will Telstra get more wireless spectrums, etc
2. ACCC's proposal to cut fixed line charges
3. Hedgies indulging in paired trades shorting Telstra to bankroll long positions into riskier but higher...errr sorry...lower yielding stocks like banks and resources
4. Likelihood of minority government being deposed leading to a new era of uncertainty of TLS
5. Govt proposal to structurally separate TLS
6. Price war by TPM and other ISPs.
All of these factors were more or less known even when the share price was +$3. So what factor is new and unknown, what is known by the big sellers which is not known by sundry bob and me? As Rumsfeld said, this is an unknown unknown.
An example of such is something hitting TLS say from the ACCC. Impending news has a habit of leaking into pockets of the investment community. Those institutions selling must know something which us ordinary joes don't.
The Telstra chart has a habit of predicting news. It rallied from 2/6 to 18/6 just before the financial heads of agreement with NBN Co were announced. Whoever bought (poor sods) on this day of good news is probably in the red. The smart money was buying TLS stock between 2/6 and 18/6 and selling it on 21/6 when the announcement was released.
I am very tempted to keep buying TLS as it hits new lows but something is telling me that news is on the way which explains this sell-off and to wait till this event to buy more.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)