Opportunities can also be found in the European technology sector.
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International Markets - Technical Analysis
The two leading U.S. indices have broken their upward trend that had lasted for months, so from a technical perspective, a downward trend remains visible. There is still room for prices to fall, so opening long positions seems early at this point. The Russell 2000 had already signaled significant weakness earlier. Although some buying pressure is currently observable, which could lead to a corrective rally, this appears to be more of a temporary rebound than the start of a sustained uptrend. Following their corrections, the DAX and Stoxx 600 indices also appear to be turning downward again, so the formation of new swing lows cannot be ruled out for them either. The index tracking emerging markets has not yet been able to demonstrate any significant buying momentum, so there is still some room here for further weakness.
Chemical Giant's Chart Signals a Potential Turnaround
Major U.S. indices have broken their longer-term uptrends, triggering a significant market correction. Despite this, there are always stocks that exhibit relative strength and may be able to move against the prevailing market direction. This week, one of the standout names was Dow Inc., which ranked among the strongest performers. The company is one of the world's leading players in the chemical industry.
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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