European Software Companies Are Set to Make a Comeback
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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.
European stock markets are currently outperforming their U.S. counterparts, and thanks to the gains of the past few days, our screenings have identified a number of interesting stocks. Among these, we have highlighted stocks that have recently shown signs of a structural turnaround, while strengthening buying pressure is also supporting the positive technical picture. One such company is Germany’s Nemetschek, a leading provider of construction and architectural design software. The other is the Dutch firm Wolters Kluwer, which offers professional information, software, and specialized database solutions. For both stocks, the search for long entry opportunities may have begun.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Wolters Kluwer (daily): Following a significant drop, we’re seeing a shift in market structure. In addition, signs of supply exhaustion have emerged, which may also suggest that a correction is on the way. The ideal trend is still a long way off; even the smallest expected correction could push prices up to the 87.5–94 range—and that’s without even considering a potential trend reversal later on. The 50 level serves as strong support on the downside, while concentrated buying pressure has emerged above it. During pullbacks, it may be worth looking for long entry points.
Nemetschek (daily): This stock has also experienced a significant decline, and it essentially shows the same strong exhaustion of supply—meaning the strength of the selling side has diminished considerably, which is also responsible for the recent sharp rally. Even a simple correction could be substantial for this stock, as the thick red line representing the ideal downtrend is still far away. Even a moderate correction could push the price up to at least around 75 euros. The 50-level is a strong support; if the price approaches this level, it may be worth looking to buy.
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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