Several sectors are showing signs of a turnaround
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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.
As the technology sector—which had been the market leader until now—began to correct, other sectors are already picking up the baton. In recent days, real estate, healthcare, and financial companies have outperformed or at least remained stable, suggesting that a turnaround may be underway for some previously underperforming stocks. Signs of a turnaround are visible, for example, in Mid-America Apartment Communities, which owns and operates residential properties, and Aon, which operates in the fields of risk management, insurance brokerage, and human resources solutions.
Best rated US stocks based on momentum ranking
Compelling technical picture:
Mid-America Apartment (daily): The recent rally over the past few days may have marked the end of a longer-term consolidation pattern. By breaking above 131.25, this level has become an excellent support and, at the same time, a short-term risk management level. The long entry point could be below 140 at current prices. The target price could reach last year’s high above 168.75. It is advisable to manage risk later by breaking the thin green trendline.
Aon (daily): A breakout from a long-term downtrend may be on the horizon. Significant gaps have already formed to the upside (305) and, more recently, below 318. This pattern could provide very strong support from below while opening up room for an upward move. The target price could be around the previous high (406), but at least 375.
List of stocks with a chance of a turnaround in the coming weeks
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Most popular US 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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