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The markets remain near their all-time highs, while there appear to be few attractive opportunities at the moment, as the momentum-based screening list yields hardly any viable results. Today’s list does not feature stocks rebounding from a prolonged downtrend, but rather two stocks that are attempting to break out of strong trend-confirming patterns and offer entry opportunities with tight risk management. It’s worth keeping an eye on AMD and Intel, two of the world’s leading semiconductor companies, where attractive entry opportunities could emerge even in the short term.
International Markets - Technical Analysis
Among U.S. indices, the S&P 500 and the Nasdaq have not yet broken below key support levels. Although a slight rise can be observed, it has not yet been accompanied by significant buying pressure. In contrast, the Russell 2000 has already undergone a structural shift and is currently characterized by a downtrend. The index representing the German market, as well as the Stoxx 600, continues to move in a downward trend, and there are no signs of a reversal yet. The index tracking emerging markets remains below an important resistance level, though selling pressure does not appear particularly strong either. Overall, the current market environment is not conducive to taking long positions: expected return potential remains limited, while risks remain significant.
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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