[Chart Of The Week] Home TV Stocks

JC Parets
July 29, 2020

One of our favorite ways of looking at a sector or industry group is by using equally-weighted charts.

A lot of "Home TV" stocks have been on the move, so we're going to take a look at what's happening and determine what's next for the group.

First, let's take a look at our equally-weighted custom index of Den Networks, Hathway Cable, Sun TV Network, TV18Broadcast, and Zee Entertainment. Prices did break down to new all-time lows during the March decline, but quickly reversed and took out the downtrend line from their 2018 highs. Now, prices are testing former support/resistance with momentum diverging negatively, suggesting a near-term pause is likely.

Click on chart to enlarge view. 

Longer-term it appears this bearish to bullish trend reversal is intact. Now we want to be watching closely to identify how much of the recent gains the index gives back. If prices can stabilize above their now upward-sloping 200-day moving average, that would be a positive and suggest further gains to come. With that said, a break above 107 is needed to confirm further broad-based strength from this industry group.

For now, since the trend is sideways, we need to remain very selective in how we play this theme.

And here are prices of this index relative to the broader market, in this case, the Nifty 500. It's at a very similar support/resistance level and is now pulling back. Prices would need to break above 0.0115 to confirm this bearish to bullish trend reversal and signal further upside towards 0.015.

After a strong move off the lows, the industry group's price trend, relative strength, and absolute momentum are all improving, so we'd rather be erring on the long side than short of it.

With that said, we're remaining selective until the equally-weighted index can make new absolute and relative highs and signal that all (or most) of its components are participating to the upside. Many of them are messy and it's difficult for us to define our risk and identify attractive reward/risk entries for our timeframe.

Below we're looking at each of the individual components on a weekly basis, with the stock's relative strength versus our custom index in the bottom panel.

First, let's start with the best-looking stock of the group...Hathway Cable.

The stock is in a very wide range longer-term, so we're going to focus on the major support/resistance levels that are in play. 48 is our line in the sand. If prices are above that, we could see further upside towards 75, but below 48 then there's risk of prices retracing as far as its initial breakout level at 29. On a relative basis, this is one of the strongest names in the index, and is testing resistance near all-time highs.

Next up is Den Networks. Prices are above support near 60, but below resistance near 117. If prices break above 117, that would confirm its bearish to bullish reversal and suggest further upside towards its all-time highs of 240. And on a relative basis, prices are rounding out a nice base and working higher.

Next is TV18 Broadcast Ltd., which is rangebound at best. For now, we can treat it as such, with support at 26.50 and resistance at 49.50. On a relative basis, it's sideways at best too.

And here's Sun TV Network, which remains in a downtrend on an absolute or relative basis. As long as prices are below 480, there's no reason to own this stock as there's downside risk towards 260.

And last is Zee Entertainment, which looks the worst of all of these stocks. Prices failed at 190 resistance again and are now moving back towards its March lows of 105. And on a relative basis prices are pushing towards new all-time lows.

As you can see, the stocks in this industry group are mixed at best. The recent rally has been a good step in the right direction, but we're far from going "all in" on these stocks. Patience and being selective remains the best course of action in this space if you're going to play it at all.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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