Energy sector dominate European stock markets too
Related content
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.
The energy sector once again performed exceptionally well on European stock exchanges this week, continuing its weeks-long run as one of the leading sectors. Companies producing basic consumer goods also performed well. Despite this, we did not find any high-quality stock curves that are currently turning and giving appropriate entry signals that would be technically attractive. The shares of Nestlé and Galp Energia may offer more favorable entry points after a minor correction.
Best rated European stocks based on momentum ranking
Compelling technical picture
Nestle S.A. (daily): A longer-term downward trend can be observed, but there are already signs of a reversal. No further decline has occurred below the low of 75, suggesting that selling pressure is gradually running out of steam. Although the swing peaks of the rising waves continue to decline, this picture would change if, after a higher low, the price broke through the thin red trend line. This would be a clear long signal. A retest around 78 may be sufficient for the curve to give a long entry if the above conditions are met.
Galp Energia (daily): A structural change began on the curve in mid-July last year, followed by a deep but, from the perspective of long setups, non-critical retest. The rise in recent weeks has brought a new swing high, indicating that the trend has reversed. A more decisive retest could provide a favorable risk-reward ratio and a technically better entry point. There are still good long entry opportunities in the zone below 17.19 above the rising trend line. If the price rises above 18.75 on a sustained basis, it would also make a new peak likely.
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.
Get more out of your investments!
Global Markets Services
OTP Global Markets offers a broad range of services in the field of local and international money and capital markets.
Read morePrivate Banking Services
Personal care and expertise with OTP Private Banking, along with the knowledge, security, and innovations of a multinational banking group.
Read more