New opportunity in the telecommunications and IT sector on KPN KON traded on Euronext Amsterdam

Following is a sample trading brief you will receive going forward for potential market opportunities we think are better to exploit after rigorous analysis and research.

Date: Sep 15, 2024

Market Focus: Equities

Time Horizon: Swing Trade - 5 days average

Distribution Time: Pre-Market/Post-Market/Intraday Update

Market Overview

• Global Sentiment: This section contains major global developments affecting the market, like overnight events, geopolitical risks, and earnings reports.

• Key Economic Data: This gives a snapshot of any important upcoming data releases or central bank announcements.

• Current Market Condition: The market is currently bearish to slightly neutral. Major improvements in the futures market suggest that going into the news week with a lot of central bank announcements on their monetary policy and intended actions they could take going forward to curb inflation and stimulate the economy. Describe the market tone (bullish/bearish/neutral) and major movements in futures, indices, or major asset classes.

Technical Analysis

• Major Support/Resistance Levels for Stock KPN KON:

  • Support: 3610

  • Resistance: 3780

• Indicators:

  • Moving averages (e.g., 50-day, 200-day)

  • RSI (Relative Strength Index)

  • MACD (Moving Average Convergence Divergence) signals

  • Divergence between the price and MACD if any

  • Volume Profile - low is receding momentum, high is gaining momentum

  • Conflicts on lower and higher time frames.

Chart

Trade Rationale

• Asset/Instrument: KPN KON [Stock]

• Ticker: KPN

• Trade Type: Short

• Entry Point: 3.730

• Exit Target: 3.650

• Stop-Loss: 3786

• Position Sizing: 5% of portfolio

Bank of America expects headwinds to persist for European telecoms in the next three months, while it signals a better end to the year. Capex trends are net positive, but pricing is becoming less stable. Domestic service revenue trends across the European telecom sector slowed in Q2, and a further slowdown is expected in Q3 before a rebound in the last quarter of the year. For 2025, growth of +1-2% is expected.

The stock reached a key resistance level on the daily time frame, forming a closely resembled double top pattern on the weekly time frame. Although there is a conflict with bullish divergence on the lower time frame, we anticipate this to be short-lived, and the stock should technically fall from the current levels.

Strategy

• Catalysts: None. No major news nearby on the horizon for Europe.

• Risk Factors: There is a risk posed by the bullish divergence on the 4-hour time frame and the market volatility going into the major economic events next week. Unexpected macro events could impede the bearish expectations. We believe these risks are minor, however.

• Correlation: This short trade balances our current long positions in the tech sector to an extent.

• Portfolio Exposure: This trade instead of adding, mitigates the overall portfolio exposure at the time of writing this brief.

• Maximum Risk: 1-5% of the total portfolio capital

• Hedging Strategy (if applicable): Nothing specific related to this stock, but we can consider hedging the position should we see some major improvements in the following days. As of now, no hedging is required for this trade.

Economic Events

10:00 AM EST: Fed Chair Powell speaks.

• Impact: This may cause volatility in US equities that could spill over to the telecom sector.

  
  

08:30 AM EST: Non-Farm Payrolls

• Impact: This may cause volatility in USD and equity markets depending on monetary policy signals.

Summary

Since holding a bearish position on margin has borrowing costs associated with it, we expect to exit the position within the next few days. We may exit on demand as usual, at which point in time, you will receive an email alert for the trade closed or adjusted.

Closing Notes This trade is valid only as long as the price doesn't move 3% - typically for a day or two.

Don't consider the trade if the stock has moved beyond 3.700 or Don't pay more than $3 for the position.