Communication has been revolutionized by the latest generation of cell phones and other mobile gadgets, including Apple's iPhone and the Blackberry from Research In Motion Limited, but the telecommunications sector has largely failed to capitalize on mankind's addiction to the cell phone. The Telecommunications HOLDRS Trust (TTH: sentiment, chart, options) has suffered a rough year, as the exchange-traded fund (ETF) has dropped more than 10% since the start of 2009, easily underperforming the broad market. In fact, TTH has been locked in a sharp decline since October 2007, falling under resistance at its 200-day moving average.
From a sentiment perspective, options players have high hopes for a rebound in the trust. The Schaeffer's put/call open interest ratio (SOIR) for TTH stands at an annual low of 1.35, indicating that short-term options speculators have not been more bullishly aligned toward the ETF at any other time during the past year. A shift in sentiment toward the bearish end of the spectrum could create a fresh wave of selling pressure for the group.