In last week’s webinar, David & I considered the extent of this year’s market sell-off, which sectors and markets had suffered the most, and whether a reversal of fortune beckons as we move towards year-end and perhaps a Santa’s rally. Of course, we have the FOMC in November when the Fed is expected to raise rates by 0.75% once again and the fourth by this amount in a row; plus, we do have the last FOMC to look forward to in December.

Regardless of the above and from a technical and VPA perspective, stocks in this year’s worst-performing sectors look interesting which is why I’ve drawn up a list of stocks for analysis in the coming weeks.

The image below is from Finviz and confirms that the two worst-performing sectors/groups YTD are Technology and Communication Services. As I mentioned in the webinar, I am using a very simple filtering system which is 1. Only US stocks. 2. Stocks with a market cap of over $2bn, and 3. Must have an average volume of over 1m. This has resulted in 24 Communication Services stocks, although some are also Tech stocks.

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The first stock I want to cover is Lumen Technology (LUMN), not only because of the really nice VPA signatures on the daily chart but also because almost 16% of Lumen shares are currently sold short, resulting in a short ratio of 12, and any short ratio over 10 increases the possibility of a sharp squeeze higher. FINRA requires all short positions to be reported twice a month, and the next date is Tuesday, 25th October, so a nice confluence of fundamental factors alongside our technical signals.

Earnings season is also underway, and Lumen is due to report on the 2nd of November.

(Click on image to enlarge)

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