The Austrian energy giant is starting to look promising
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The government crisis is over – what lies ahead for Romania?
Romania has experienced five turbulent months on the domestic political front. Nevertheless, after several prime ministerial candidates failed to secure parliamentary support, a new government was finally formed in late October. The Romanian equity market, which had performed strongly during the first half of the year, lost momentum towards the end of August and entered a downward correction in September. It then rebounded in October, partly reflecting the reduced risks of a snap election and a sovereign rating downgrade to below investment grade. While domestic political tensions have subsided, the BET index has yet to recover to the vicinity of its August peak. At the same time, Romanian equities no longer appear particularly inexpensive from a valuation perspective.
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.
European markets are also trading near key resistance levels, in the shadow of previous highs, so it’s no surprise that momentum strategies are currently underperforming. It’s hard to find a stock that shows a convincing reversal signal and thus offers an attractive long opportunity. In today’s analysis, we examine the chart of Austria’s largest electricity provider and one of Europe’s leading hydropower companies. The stock belongs to the category of defensive, low-volatility companies that pay stable dividends. Normally, we would look for a clearer technical picture and a stronger long setup, but in the current market environment, high-quality reversal opportunities are so scarce that, out of the four stocks we examined, this one proved to be the most promising.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Verbund (daily): Looking at the technical chart for this stock, it’s fair to say that there’s now a realistic chance of an uptrend, as it has broken its downtrend and formed a higher low. Unfortunately, the upside potential isn’t great; significant resistance looms around the natural level of 68.75. 62.5 is also a resistance level, so it may be better to buy primarily during a retest.
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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