Heineken: It pays to be vigilant
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US bank shares fell
The third-quarter earnings season in the US has picked up pace following the release of the latest figures from US banks. Based on preliminary expectations, the third quarter is likely to have closed with strong earnings growth for S&P 500 companies, led by the energy and technology sectors. The major US banks have still achieved solid growth on an annual basis, indicating that their operations remain strong, but the pace has clearly slowed in many cases, which has tended to result in negative share price reactions.
Commodities - Technical Analysis
Gold and silver continued their downward trend, bouncing off key levels. Until their downward trends are broken, they will not be able to produce a significant rise. The fall in oil prices reversed from the $87.5 level and began a slight upward movement. Natural gas remained in an uptrend; a significant rise could even occur if it breaks out upwards. The price of copper has become stuck in a wider range, so the oversold and overbought zones may offer more favourable trading opportunities. The falling prices of wheat and corn have reached key support levels; a buying reaction from these levels could present favourable long opportunities with limited risk.
Although markets are showing a slight upturn, momentum is still lacking and rebuilding it will take time. As a result, there are no real opportunities to be found: there are no high-quality stocks awaiting a turnaround that offer serious return prospects. The analysis focused on two companies, Henkel and Heineken. Both stocks show some signs of accumulation, and the downward trends have been broken, but neither stock shows any real significant potential at this stage.
Best rated European stocks based on momentum ranking
Compelling technical picture
Henkel (daily): Over the past two weeks, the buying side has taken control. 75 is an important level; if it can break through, an important support zone could form below 75, from which the zone between 81.25 and 87.5 could be reached.
Heineken (daily): The downward trend was broken when the price rose above 62.5. Since it was able to break out of this prolonged sideways accumulation phase, this could create a good basis for further gains. Values above 68.75 seem achievable. It is worth managing risk along the thin green upward trend line.
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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