Telefonica Brasil SA (ADR) (NYSE:VIV) continued its rally to the third consecutive session of positive closing with a gain of 1.39% and considering that the stock has reached the current level of $16.75 from sub-$15 levels in just 3 weeks, the short term performance looks very impressive indeed. The company is fixed lines telecommunications services provider in Brazil, to corporate and residential customers.
The products offered by Telefonica Brasil SA (ADR) (NYSE:VIV) includes IT support and telecommunications solutions to various industries like financial institutions, government, manufacturing, services, telemarketing call centers and retail etc. It also offers international, intraregional and interregional voice services, including activation and monthly subscription, coupled with data services comprising mobile value added services and broadband services.
Technically, the stock has been in a bear market for a long time now. It recently tested sub-$15 levels, last seen in 2004 and that is not a great advertisement for strength. The long term chart shows both the inherent strength of the stock coupled with the immense volatility. The stock has twice been rejected from the area around $37 but managed to recover all the loss even from the lows of $8.
The first leg of the current bear market pushed the stock from $37.47 to $16.75, or $20.72 in magnitude. The intermediate bounce ended at $32.14 in 2011. If the current leg of the bear market takes the same form as the first one seen in 2007-08, then one can keep a sharp eye on the price action around $11.42, almost coincident with the 2004 bottom.
The price action suggests just a bit of bearish exhaustion in the last few months as the decline has taken the form of Falling Wedge, though no bullish stance can be taken unless the resistance at $18 and then $20 is overcome firmly.
