The Telecom sector closed on Friday May 30, 2008 at $98.76.

The high over the last year was $117.13 on July 23, 2007 and the low was $88.02 reached on March 20, 2008. From the peak to the trough that represents a drop of –23.1% for the telecom sector vs. the TSX, which dropped –11.7% and the S&P 500, which dropped –13.8%. Year-to-date the TSX is up about 6.4% and the S&P is down about –4.6% while the telecom sector is down about –4.7%. Since March 20th the TSX is up over 15% and the S&P is up about 5% while the telecom sector is up 9.6%. Again, like healthcare, financials & technology, is this a potential longer-term trend reversal with some sustainability?

The chart suggests that we could be seeing a shift in the trend from a negative downward channel to a positive upward channel. The current price crossed the 50-day moving average on April 1st. It has managed to maintain its status above the 50-day moving average until May 22nd, 2008 where the current price dipped below but has since then moved above. We have seen the start of an upward channel forming represented by the lower trend line showing rising bottoms and the upper trend line showing rising tops.

Some of the Canadian Companies you may recognize in this sector are BCE Inc., Bell Aliant Regional Communications Income Fund, Manitoba Telecom Services Inc., Rogers Communications Inc. and Telus Corporation.

Technically, we are getting a buy signal from the broader sub indices, however the only companies that have had positive moves in share price are Telus, Manitoba Telecom and Rogers since April 1st. Fundamentally, BCE Inc pays a great dividend but has a lot of deal risk and Bell Aliant Regional Communications Income Fund has dropped since their 1st quarter earnings report in early May.