Trend-amplifying patterns in semiconductors
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International Markets - Technical Analysis
Among U.S. indices, the S&P 500 and the Nasdaq have not yet broken below key support levels. Although a slight rise can be observed, it has not yet been accompanied by significant buying pressure. In contrast, the Russell 2000 has already undergone a structural shift and is currently characterized by a downtrend. The index representing the German market, as well as the Stoxx 600, continues to move in a downward trend, and there are no signs of a reversal yet. The index tracking emerging markets remains below an important resistance level, though selling pressure does not appear particularly strong either. Overall, the current market environment is not conducive to taking long positions: expected return potential remains limited, while risks remain significant.
Is a new era dawning in the development of artificial intelligence?
In recent weeks, concerns about the security risks of AI developments have once again taken center stage. Several leading industry players have come out in favor of a more unified security framework and a slower pace of development. Although U.S. policymakers have so far rejected unilateral restrictions due to the technological competition with China, the debate may already be affecting players in the AI ecosystem. These developments are creating uncertainty regarding future growth rates, which could put pressure on the semiconductor industry in the short term, while providing temporary relief for the software sector. At the same time, in our view, the impact on long-term fundamentals is likely to be limited for now. Meanwhile, cybersecurity companies stand to benefit most from the increased focus on security.
The markets remain near their all-time highs, while there appear to be few attractive opportunities at the moment, as the momentum-based screening list yields hardly any viable results. Today’s list does not feature stocks rebounding from a prolonged downtrend, but rather two stocks that are attempting to break out of strong trend-confirming patterns and offer entry opportunities with tight risk management. It’s worth keeping an eye on AMD and Intel, two of the world’s leading semiconductor companies, where attractive entry opportunities could emerge even in the short term.
Best rated US stocks based on momentum ranking
Compelling technical picture:
AMD (daily): The price has formed an ideal trend-confirming pattern. Two weeks ago, it broke out of its downward corrective trend, and last week it showed strength on the long side. The rally appears to be part of a trend, and the accumulation is sufficient to provide room for further gains. In the longer term, 750 could be a target price based on this trend-confirming pattern.
Intel (daily): The breakout above the corrective trendline occurred two weeks ago, but the pattern indicating a trend-following rally wasn’t completed until the end of last week. Buy opportunities can be sought at the 100 risk management level. Due to the trend-confirming pattern, this year’s June high (137.5) may come back into focus.
List of stocks with a chance of a turnaround in the coming weeks
Most popular US 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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