Trend-amplifying patterns in semiconductors
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A historic turning point in Brazil’s presidential election
In Brazil’s presidential election, Lula achieved something no one had managed in nearly four decades: he overturned a first-round defeat to win the runoff and he will become president for a fourth term. However, market participants had priced in a victory for Flávio Bolsonaro and, with it, the prospect of a fiscal turnaround. Lula’s win therefore triggered a significant correction in the Brazilian stock market. Lula will face a difficult balancing act between market participants demanding fiscal consolidation, voters expecting him to deliver on his campaign promises, and an increasingly right-leaning Congress where governing will require political compromise. Although Brazilian equities remain attractively valued, post-election uncertainty may keep Brazilian assets under pressure in the short term.
Commodities - Technical Analysis
There has been no change in the downward trend for gold and silver, but selling pressure is easing for both precious metals. As long as the trend lines driving the decline remain intact, a sustained reversal cannot be expected. The price of oil has broken through the 100 level, and the trend remains upward for now. Natural gas may correct higher following a sharp price decline. Copper, trading within a wider range, may be approaching the upper end of that range. After sharp declines, wheat and corn prices may have reached key levels where the likelihood of a reversal is increasing.
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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