Upside potential in the Polish banking sector
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European stock markets have failed to reach new highs; in fact, they are significantly underperforming their U.S. counterparts, so there are few truly high-quality reversal signals visible in the market at the moment. Last week, however, one of the stocks from our Equity Top Pick List, Novo Nordisk, signaled the start of an uptrend, which continues to hold. The stock continues to hold a prominent position among the assets worth watching, so it remains advisable to keep it in focus. In addition, we took a closer look at Delivery Hero shares this week, as a favorable long-term situation is beginning to emerge there as well.
Hungarian Equities - Technical Analysis
The index continues to be in a correction phase, which could later lay the groundwork for a long-term upward move, provided the key levels listed below remain intact. MOL: Moving through a correction phase, showing a neutral picture for now; we are awaiting a concrete signal. Richter: It remains a realistic scenario that a rounding bottom pattern has formed with a neckline at 12,500. This could provide an opportunity for a pullback to the 11,875 level. Magyar Telekom: Despite the dividend payment, the stock was already in a correction phase. Opus: A break in the downtrend is imminent; this would “only” require a break above the downtrend line. 4iG: It remains in a downtrend, but the 1,875 level is a key support. No buy signal has been received yet, but if the price stabilizes above this level, the path could open up ahead of a reversal.
This week, companies producing basic consumer goods and banks performed the best. Two Polish banks came into focus, breaking out of longer accumulation and trend-reinforcing patterns. We analyzed the price curves of PKO Bank and Santander Bank in detail.
Best rated European stocks based on momentum ranking
Compelling technical picture
Santander Bank Polska SA (daily): Signs of change have been appearing on the curve for weeks. However, the rise over the past two weeks shows strength, so any dip can be used as a buying opportunity. Retesting the 500 level could provide a favorable long entry point. The target price is around 625. The initial risk should be managed by closing below 468, and later it can be adjusted to the rising trend line.
PKO Bank Polski SA (daily): After the accumulation period of recent months, the correction phase has ended. With a close above 78, a trend-reinforcing long wave has started. The target price points to around 100 from the trend-reinforcing triangle formation. It is worth managing the risk with a close below 75.
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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