TLS chart, page-486

Recently I had posted negative divergence developing on an hourly chart of TLS. We had not seen it on the daily at that stage. I was concerned of a fall following the report. We had a fall but it was very short lived, with TLS quickly recovering and heading back up to $3.25. 

We now have clear negative divergence on the daily. So I now expect weakness that is a little more lasting than a day. Patience is the game.

As I mentioned earlier, I would look to enter once I see the $2.98-$3.00 gap filled and the RSI goes down to touch the 50 level, or even better, pierce the 50 level and onto 40. 

Some gaps don't get filled for 1-2 years, but I don't think it will take that long for this gap to be filled.

Although results and conditions remain weak, it is difficult to see where the resilient share price of late is coming from and how the share price will rise from here. But the fact is that TLS has completed a 60% fall across 3.5 years. Meaning that it has been so hammered that a large oversold condition is already priced in. To the extent where even a further second cut to the dividend and a plunge in profit seems to have had little shocking effect on the price (unlike August 2017, -10% shock and all other shocks along the way). This suggests the $2.60 low from June last year is likely to be the bottom. In which case, the share price should climb as all top 10 large caps do after bottoming. What will be the driver behind the TLS share price if it has already bottomed and yet profits and dividends have plunged and conditions are so weak? If the chart has to go to $3.50 and $4.00, how and why will it?

It must be things like favorable ACCC decisions on TPM merger, a NBN write down, Penn and Chairman leaving and a slow steady growth in 5G uptake.

For the first time in a long time, we have the 200 DMA flattened out. We need to see if the price respects this line, if at all falls under it, it quickly comes back above it and mostly sits above it.