A sharp turnaround in the healthcare sector
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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.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
The market has shifted from the rally—which had been driven primarily by the technology sector—into a rotation phase, where liquidity freed up by profit-taking in the previous leaders may flow into the stocks of lagging but still sound companies. This is why the Stoxx 600 index is not falling: the stocks that contributed significantly to the rally are already in their correction phase, while the underperformers have begun to rise. Companies in the healthcare sector continue to perform well, which is why we examined the UK-based Haleon in today’s analysis. The company operates in the global consumer healthcare market; its main products include non-prescription medicines, vitamins, oral care products, and other health and wellness products. Haleon spun off from GSK (GlaxoSmithKline) in 2022 and has since operated as an independent, publicly traded company.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Haleon (daily): The downtrend may have come to an end; we saw a strong buying day last week. A higher low and rising volume indicate that sentiment has shifted. The downtrend structure has also changed, so it’s worth looking for an entry on the long side. The minimum target price is 375, but the 406 area could also come into focus. It’s advisable to manage risk using the thick green trendline.
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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