The energy sector remains the winner
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The government crisis is over – what lies ahead for Romania?
Romania has experienced five turbulent months on the domestic political front. Nevertheless, after several prime ministerial candidates failed to secure parliamentary support, a new government was finally formed in late October. The Romanian equity market, which had performed strongly during the first half of the year, lost momentum towards the end of August and entered a downward correction in September. It then rebounded in October, partly reflecting the reduced risks of a snap election and a sovereign rating downgrade to below investment grade. While domestic political tensions have subsided, the BET index has yet to recover to the vicinity of its August peak. At the same time, Romanian equities no longer appear particularly inexpensive from a valuation perspective.
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.
We have seen significant declines in the markets; the downturn is practically universal, so the model yields almost no results in such situations, as most stocks are trending downward and momentum is pointing toward further declines. Nevertheless, there are always winners; due to the crisis, the energy sector continues to perform well, with Norwegian and British companies at the top of the list, though unfortunately these have already seen significant gains. Among the others, Verbund AG has made its presence felt; it is a major energy company majority-owned by the Austrian government, serving as Austria’s leading electricity provider and one of Europe’s largest hydroelectric power generators, producing electricity almost entirely from renewable energy sources.
Best rated European stocks based on momentum ranking
Compelling technical picture
Verbund (daily): Before breaking the downtrend, the chart left a gap behind, which is a very good sign since it hasn’t been filled. We’re seeing upward days accompanied by strong volume, which could lead to a minor retest. The area around 62.5 should hold the decline; otherwise, the reversal could fizzle out. For this to happen, however, the price would need to close below 59.4, which could thus serve as the initial stop level. Consequently, a long position can be opened with low risk around the 62.5 level. The target price could be 81.25, above which a gap may halt the upward movement.
List of stocks with a chance of a turnaround in the coming weeks
The model did not return any results.
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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