Our Equity Top Pick List
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Commodities - Technical Analysis
Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
Our latest Investment Strategy recommends an overall neutral exposure to the equity asset class over the next 6-12 months. We believe this should be taken into account when making investment decisions in individual equities (the timing of investments or the size of positions).
The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. At the sector level, we examine the relative position of each stock on the basis of indicators (like valuation, profit growth prospects, indebtedness, quality), and then, after an individual analysis of the best performers, we select the companies we consider most attractive from a risk/return perspective.
Given the fundamental selection process, the stocks on the list should be treated as longer-term investment opportunities, but are reviewed on a quarterly basis to check whether the stock is on track with our original expectations or whether there is a sector peer with a better risk/return profile. The list can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. In the latter case, the technical analysis methodology should be used to time/determine the specific investment decision. This is the purpose of our Trading Ideas report, which will also provide a specific trading strategy for the stocks on the list, if indicated.
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