The market environment is uncertain
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AutoWallis: Earnings Recovery Delayed
Following the latest quarterly results, we have revised our DCF model and earnings estimates. We cut our 12-month price target to HUF 158 and downgrade the shares to Hold from Buy. The challenges facing the Distribution business unit have not been resolved and, if anything, intensified during the first half of the year. This was the key driver behind our downward revisions to this year’s revenue and earnings forecasts.
International Markets - Technical Analysis
After reaching new highs, U.S. indices are beginning to form patterns that could even signal a trend reversal, so the emergence of short signals cannot be ruled out. At the same time, it’s worth waiting for the first decisive down day, which could confirm this scenario. The next few trading days may reveal whether a reversal is indeed taking shape. Following the German market’s new high, it would be important for the top gap—which is still open—to remain unfilled. However, if this were to happen within the next two days, it could be interpreted as a sign of market weakness. The Stoxx 600 index is showing slightly weaker performance, but there is no clear selling pressure yet. The index, which tracks emerging markets, has remained below the 68.75 level, so there is a possibility of a lower high forming, which could increase the likelihood of another downtrend.
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.
Best rated US stocks based on momentum ranking
Compelling technical picture:
We are not issuing any technical recommendations on any stocks this week.
List of stocks with a chance of a turnaround in the coming weeks
Based on the screening results, we did not receive any papers indicating a turnaround from a sustained decline this week.
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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