The market environment is uncertain
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A new world may be dawning for Brazil
Elections are coming up in Brazil in October: of the two candidates who appear to be the frontrunners, current President Lula’s lead over his main challenger, Flávio Bolsonaro, appeared to be waning according to opinion polls. The race is not yet decided, and the stakes are high, as the next president will face, among other tasks, the challenge of allaying market participants’ concerns about Brazil’s growing national debt. Based on initial market reactions, investors are responding positively to Flávio Bolsonaro’s narrowing of the gap with Lula in the polls; or, to put it another way, market participants appear to be placing their trust in a stricter fiscal policy and spending cuts than before, as well as in the possibility of lower interest rates resulting from this and less government intervention. There is still roughly one month left until the Brazilian elections, and the next president will set the course for both Brazil and the local stock market in the coming period.
Hungary: Inflation in August was 1.3% YoY much below the inflation target, but service inflation is still high
Hungary's headline inflation increased to 1.3% year-on-year in August from 1.2% in July. The published data was lower than the consensus and our forecast (both 1.4%). The lower-than-expected inflation was due to above expectation core inflation but lower than expected fuel inflation and lower increase of administered prices.
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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