European carmakers: breaking their long-term downward trends
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Commodities - Technical Analysis
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Strong performance from Expedia
Despite the war in the Middle East and rising energy prices, U.S. consumer spending—and, by extension, travel DEMAND—proved to be sufficiently resilient in the second quarter, from which Expedia also benefited greatly. The company beat analysts’ expectations across all major metrics, with revenue growing by 14%, while also successfully maintaining its strategic goal of cost control, resulting in profit growth of over 20%. Cash generation is very strong, which is being used to repurchase shares, and for now, there's no sign of a slowdown on the demand side, leading the company to raise their full-year expectations for this year. Given the improving fundamentals, we are raising our fair value estimate to $365.
The picture was mixed this week, with no sector standing out from the rest. Two car manufacturers were among the best performers, both breaking their long-term downward trends with a rise. This week, we took a closer look at the price curves of Renault and Stellantis.
Best rated European stocks based on momentum ranking
Compelling technical picture
Stellantis (daily): Signs of change can be seen in the long curve, which has managed to rise above 9.38 in recent days, and has even broken through with a gap, which could also be a good risk management level. Buying opportunities can be sought during declines. However, the short-term target price around 12.5 already indicates a strong resistance zone.
Renault (daily): Over the past four months, we have seen an accumulation phase on the curve. In the last few days, this has also broken the downward trend with a gap, which could be a sign of strength. The 34.38 level could initially be the risk management level, while the short-term target could be 40.63, which could also fill a previous downward gap.
List of stocks with a chance of a turnaround in the coming weeks
Most popular European stocks
The momentum model supports the creation of a technical based stock list that helps to find shorter-term trading opportunities. The model can be used to identify stocks that show reversal signals following more sustained falls/underperformance. We examine one-year, six-month, three-month, one-month and five-day momentum values, which are used to rank the stocks under consideration. The higher a stock is ranked in the order, the better it technically performs relative to the others. The change in the ranking over time is used to determine the life cycle of the stock.
- In the first table, we collect the stocks that show the most attractive picture compared to the others in a given week based on momentum factors, of which those are also presented in a separate chart where a favourable situation can be identified based on additional technical analysis tools.
- In the second table, we list the stocks that are already worthy of being placed in watchlist status. They are not among the best performers, but they have the potential to improve and signal a turnaround in a few days or weeks.
- In the third table, we have also collected the more popular stocks to help identify their position in the momentum order.
The report shows the results of a technical - quantitative based stock screening, which does not examine the fundamental background/value of the companies. For this reason, risk management/position sizing rules should be designed accordingly.
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