Two European stocks could see a nice turnaround
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The third-quarter earnings season in the US has picked up pace following the release of the latest figures from US banks. Based on preliminary expectations, the third quarter is likely to have closed with strong earnings growth for S&P 500 companies, led by the energy and technology sectors. The major US banks have still achieved solid growth on an annual basis, indicating that their operations remain strong, but the pace has clearly slowed in many cases, which has tended to result in negative share price reactions.
Commodities - Technical Analysis
Gold and silver continued their downward trend, bouncing off key levels. Until their downward trends are broken, they will not be able to produce a significant rise. The fall in oil prices reversed from the $87.5 level and began a slight upward movement. Natural gas remained in an uptrend; a significant rise could even occur if it breaks out upwards. The price of copper has become stuck in a wider range, so the oversold and overbought zones may offer more favourable trading opportunities. The falling prices of wheat and corn have reached key support levels; a buying reaction from these levels could present favourable long opportunities with limited risk.
Based on market movements in recent days, the shares of two European companies have shown remarkable buying momentum: Bureau Veritas and Symrise. The former operates in a less cyclical industry, while the latter has experienced a significant price decline and is now attempting a more sustained recovery.
Best rated European stocks based on momentum ranking
Compelling technical picture
Bureau Veritas (daily): It had been riding on a long ideal upward trend line. It moved in a narrow range, breaking out of it in recent days. This could provide an opportunity to reach at least the previous peak (31.25). The initial risk should be managed by closing below 26.56, and then following the upward trend line.
Symrise AG (daily): At the end of a long downward trend, there are signs of a promising movement. The rise started with a gap, and the downward trend has also broken, so a turnaround may be beginning. EUR 75 is an important level, above which there may be room to reach around EUR 87.5. The risk should be managed by breaking the thick green trend line.
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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