The energy sector remains the winner
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Commodities - Technical Analysis
Gold and silver have broken their downtrends, triggering upward waves that still hold potential for further gains. After a strong retest, the oil price may settle into a range, but there are still opportunities for further gains. Natural gas prices did not reach a new low, but no pattern indicating a reversal has yet emerged. Copper is maintaining its upward trend; it must rise again within the next few days, or the rally could break down. Wheat and corn are also beginning to turn upward again from key support levels after strong retests.
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.
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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