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Hungary: Despite the lower-than-expected headline inflation data the picture is not as rosy as it first appears
Hungary's headline inflation increased to 1.6% year-on-year in September from 1.3% in August. The published data was lower than the consensus and our forecast (both 1.8%). The lower-than-expected inflation was due to above expectation core inflation but a bigger than expected decline in food prices and a decrease in administered prices.
Commodities - Technical Analysis
Gold and silver continued their correction and even dropped below key support levels, so it’s best to postpone buying for now. The price of oil has narrowed significantly between the $87.50 level and the trend line, so any significant movement will likely require a breakout from this zone. Natural gas has retested its uptrend line, but buyers continue to show strength.Copper appears to be developing a broader trading range, making oversold and overbought zones potentially more attractive for trading opportunities. Wheat and corn continue to trade in a correction phase, while moving closer and closer to their key support levels.
The markets have become quite stretched in recent days, so the likelihood of a more significant correction has been growing. This is well reflected by the low number of momentum-based entry signals; moreover, the quality of these signals is not particularly favorable. One potential reversal signal came from the German company Nemetschek, which develops software solutions for the digitization of the construction industry, architecture, engineering design, and real estate management. After a prolonged downtrend, the stock began to rise and formed a trend reversal on the chart—that is, the previous downtrend was replaced by an uptrend. Nevertheless, in terms of buying opportunities, potential retests and oversold conditions may still offer more favorable entry points.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Nemetschek SE (daily): A structural shift can be observed in the stock’s price action, which means there may be buying opportunities. However, we only consider an entry to be favorable on a pullback; in other words, we can achieve a better risk-reward ratio closer to 62.5. The target price, however, may be 100 or slightly above that level due to the previous breakout level. A short-term oversold condition could also be a good entry point for a long position.
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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