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Hungarian Equities - Technical Analysis
The index stalled near the 150,000-point level, but so far there has not been a strong sell-off that would signal the start of a significant correction. The pattern that is taking shape may already be ready for a reversal, so it may soon become justified to look for short positions. MOL rose steadily to reach the 5,000 forint level, where the first signs of a correction have already appeared. The next significant support level is only around 4,375 forints. Richter climbed back to its previous high and stalled there, but has not yet turned downward. However, the chart is already showing signs of a potential correction. In the case of Magyar Telekom, profit-taking pushed the share price back down to the 2,500 forint level, which has so far proven to be a strong support level. Opus continues to move within a downtrend, and there are no clear signs of a reversal yet. Strong support is visible near the 281 forint level. Following a sharp rise, Rába is currently in a consolidation phase. It is worth looking for opportunities to enter long positions after a deeper retest, particularly in the range below 3,125 forints.
The market environment is uncertain
Based on recent developments, the major U.S. indices may form lower highs. These market conditions are not conducive to momentum-based entry opportunities, which is why few stocks met our screening criteria. Among these, we do not see any opportunities that would offer favorable return potential relative to the risks, so we are not issuing any recommendations this week.
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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