The healthcare sector is performing well
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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.
The markets have experienced significant gains, and for the past two to three weeks, a rotation has been underway from the technology sector—which had been the leader until now—toward other sectors. In recent days, the financial and healthcare sectors, in particular, have performed exceptionally well. Two major multinational companies operating in the healthcare industry met this week’s screening criteria. One is the Danish company Novo Nordisk, which is already on our Equity Top Pick List; the other is the Swiss-based Straumann Holding, one of the global leaders in dental implants, dental prosthetics, and regenerative dentistry.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Novo Nordisk (daily): We’re seeing a short-term reversal on the chart, which still has room to move higher. As for target prices, there are two possibilities. The closer one is at half the size of the large gap left to the downside, while the more distant one could be expected to fill at the smaller gap that was also left to the downside earlier. In the bigger picture, a structural shift would only occur if the curve rose to around 400; at that point, the path upward would be easier, and buying on every dip would be more advisable. The chance of an uptrend would fade below the thick green trendline, meaning it would need to close below 275 initially; later, this level could rise along with the trendline.
Straumann Holding (daily): The Swiss company’s stock price is also showing signs of a turnaround; it has broken out of a long-standing downtrend, and a gap remains open below 100, which could be a favorable risk management opportunity. The decline occurred in two major waves, and with the test of 75, the two-wave correction phase is now complete. As a result, a new uptrend may be beginning; there may still be room for further gains, and in the longer term, the level around 150—which was previously an important resistance level—could be reached.
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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