Based on recent developments, the major U.S. indices may form lower highs. These market conditions are not conducive to momentum-based entry opportunities, which is why few stocks met our screening criteria. Among these, we do not see any opportunities that would offer favorable return potential relative to the risks, so we are not issuing any recommendations this week.
Following the latest quarterly results, we have revised our DCF model and earnings estimates. We cut our 12-month price target to HUF 158 and downgrade the shares to Hold from Buy. The challenges facing the Distribution business unit have not been resolved and, if anything, intensified during the first half of the year. This was the key driver behind our downward revisions to this year’s revenue and earnings forecasts.
After reaching new highs, U.S. indices are beginning to form patterns that could even signal a trend reversal, so the emergence of short signals cannot be ruled out. At the same time, it’s worth waiting for the first decisive down day, which could confirm this scenario. The next few trading days may reveal whether a reversal is indeed taking shape. Following the German market’s new high, it would be important for the top gap—which is still open—to remain unfilled. However, if this were to happen within the next two days, it could be interpreted as a sign of market weakness. The Stoxx 600 index is showing slightly weaker performance, but there is no clear selling pressure yet. The index, which tracks emerging markets, has remained below the 68.75 level, so there is a possibility of a lower high forming, which could increase the likelihood of another downtrend.
The index reached its next natural level at 7,813, and the sideways movement below that level has created a neutral situation for now. The main uptrend line remains intact and healthy; however, if the upward gap at 7,600 were to close and the most recent swing low were to be broken, a reversal pattern with a lower high could form. On the upside, the next resistance level is at 8,125.
Resistance levels: 7,813; 8,125; 8,438
Support levels: 7,188; 6,875; 6,563; 6,250; 5,937; 5,781; 5,625.
This situation could very well lead to another short signal. If there were a reversal from 29,688, a break in the trend would trigger a short signal. A break below the thick green uptrend line, accompanied by a strong bearish candlestick, could trigger another decline. In that case, it’s advisable to manage risk above the 29,688 level, while the downside target could be around the previous lows, near 27,344.
Resistance levels: 30,469; 31,250.
Support levels: 28,906; 28,125; 27,344; 26,562; 26,172; 25,781; 25,000.
The correction following the new high has not yet brought about any lasting change. The series of rising swing lows and highs has not yet been broken. As soon as we see a change in this pattern, a structural shift could occur, opening the possibility of a reversal. The formation of a lower high could also contribute to this process.
Resistance levels: 3,043; 3,125.
Support levels: 2,891; 2,813; 2,734; 2,656; 2,578; 2,500.
The uptrend is still intact, and the index closed at a new high. 25,781 is the level that could trigger a sell-off. The natural level around 26,563 is an important resistance level; above that, 27,343 could be next. If the upward gap left on Friday were to close within two days, it could signal weakness. In the long term, a close below the 25,000 level could trigger a change. If a lower high is formed, the pattern could even be suitable for opening a short position. Currently, however, the index is still on the rise, but it may be approaching another strong peak.
Resistance levels: 25,781; 26,562.
Support levels: 23,438; 22,656; 21,875; 21,093; 20,313.
We’ve only seen a pullback from the uptrend, but no decisive sell-off. Signs pointing to a sustained, trend-like decline may still lie ahead. If the index continues to trade sideways, we may only see a mild correction. As long as the red downtrend line continues to push the price lower, the market may remain in a correction phase.
Resistance levels: 671.88; 687.5.
Support levels: 625; 594; 578; 562; 546.
The pace of the correction was no longer able to keep up with the rising trendline. The index remains below the key resistance level around 68.75. For the technical picture to clearly signal a sell, a break of the trendline alone may not be enough; we would also need to see a strong sell-off. We are still waiting for this, and the indicator signaling a trend-based decline has not yet turned upward, so the index may continue to trade sideways. Stronger support lies below 62.50, around the 59.38 level.
Resistance levels: 68.75; 71.88.
Support levels: 62.5; 59.38; 56.25; 53.13; 50.
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