Technical Analysis Snap: Vodafone slips on lower profits

20th May 2009 11:24

On Wednesday Vodafone posted a fall in pre-tax profits of 50% to £4.2bn a drop of 50%, after a £5.9bn one-off write-down on its Turkish and Spanish operations. This has the effect of causing the share price to slip back from its opening highs of 128.50p. However, over the last few weeks it has been trading in a broadly sideways consolidation between 115p and 135p. Looking at the charts there is no evidence that these figures will change that. The dividend has increased by 3.5% to 7.7p, less than expected. But with interest rates at their current levels, there could be a steady stream of investors looking at this relative beacon of stability. Vodafone yields over 6% and boasts a dividend cover of 2.The share was trading within two converging trend lines with support around the 120p level and resistance around 129p. Below that there is support around previous lows between 110p and 115p, followed by the October lows at 96.40p. With the imposition of further cost cutting by the new CEO, expect further cost savings to improve margins.The broker consensus remains positive with 'buy' recommendations outweighing 'sell' recommendations by a margin of more than 4 to 1.For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2