The Channel Tunnel Business Remains Highly Profitable.
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The Dominoes Are Falling: A Sharp Market Correction May Be Ahead.
The major U.S. equity indices have remained in a corrective and consolidation phase for several weeks, while small-cap stocks are increasingly displaying signs of a developing downtrend. With this week's Federal Reserve interest rate decision approaching, it is hardly surprising that uncertainty surrounding the future path of monetary policy has weighed modestly on investor sentiment and equity markets in recent weeks. Should the key support levels now come under pressure and ultimately fail, the markets could be vulnerable to a more pronounced corrective move. Investors are expected to gain greater clarity following Wednesday's Fed announcement, which may provide fresh guidance for market direction in the months ahead. At present, however, high-quality bullish setups remain scarce, with only a limited number of stocks exhibiting the technical characteristics typically associated with sustainable upside potential.
International Markets - Technical Analysis
Among U.S. indices, the S&P 500 and the Nasdaq have not yet broken below key support levels. In contrast, the Russell 2000 has shown signs of a structural shift in recent days. This week, the market is bracing for a Fed rate hike, which could serve as a catalyst to trigger a significant move. It’s worth paying close attention to key support levels, as a break below them could open up new shorting opportunities. Sell signals already appeared last week in the index representing the German market and in the Stoxx 600. The index tracking emerging markets made another attempt to break through the 68.75 level, but faced a decisive rejection there and ultimately turned downward with a significant gap. These market conditions are not favorable for buying, so it’s best to hold off on purchasing stocks for now.
Industrial stocks have started to outperform in recent days. Among them, we selected the French transportation and infrastructure company Getlink SE, which primarily operates the Channel Tunnel (Eurotunnel) beneath the English Channel, connecting France and the United Kingdom. Its chart is showing an upside breakout following an extended period of consolidation.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Getlink SE (daily): From a technical standpoint, the stock appears to be breaking out to the upside after a prolonged accumulation phase. The risk level is well defined, as the price has rebounded from its lows along a clearly identifiable rising green trendline. The price target can be placed near the important natural resistance level around 21.88. A close below 18.75 would invalidate the bullish scenario, in which case exiting long positions would be advisable.
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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