Opportunities can also be found in the European technology sector.
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Hungarian Equities - Technical Analysis
The BUX index broke its rising market structure last week, suggesting that the prolonged upward wave may have come to an end. MOL has also remained in correction phase since the dividend payment and has now fallen below the 5,000 level, leaving the next significant support considerably lower. Richter found support around 12,180, but no convincing reversal signal has been confirmed yet. Magyar Telekom continues to trade within an increasingly narrow range, with a high-momentum session likely needed to provide short-term direction. Opus remains in a downtrend. Rába is also moving within a broad trading range, although another upward wave could develop later if the necessary technical conditions are met.
International Markets - Technical Analysis
Among U.S. indices, the S&P 500 and the Nasdaq have remained in an uptrend, but this situation could easily become vulnerable. Given the high price levels near all-time highs, increased risk management is recommended. In contrast, the Russell 2000 had already been looking weak; it reached an important support level, which stalled and even slightly reversed the trend, but this does not yet indicate a sustained turnaround. The DAX and the STOXX Europe 600 moved markedly against their U.S. counterparts, performing particularly poorly in recent weeks. However, they have also reached their first significant support levels. Meanwhile, the Emerging Markets Index continues to consolidate below a key resistance level.
European markets have been relative laggards in recent weeks; however, during the correction they reached key support levels from which a strong buying response emerged. Based on the momentum factor model screening, the leading stocks in Europe are primarily coming from the technology sector. This week, we analyze two charts: Infineon Technologies, one of Europe’s largest semiconductor manufacturers, and Nemetschek, a leading software company driving the digitalization of the construction industry.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Nemetschek (daily): The long-term decline appears to have bottomed out in the 50-62.5 range and transitioned into an accumulation pattern. In recent weeks, the stock formed a new swing high, signaling a short-term change in market structure that could pave the way for further upside. The thick green line may serve as the key risk management level, while the stock has room to advance toward the upper red descending trendline. In the short term, a price target around 75 could be realistic, as this marks the first major resistance zone.
Infineon (daily): Following an ideal correction, the stock appears to be turning higher. It broke above the short-term descending trendline with a close above 56.25, subsequently retested the breakout level, and then moved on to form a new swing high. This structural shift improves the technical outlook and increases the probability of further upside.
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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