Chemical Giant's Chart Signals a Potential Turnaround
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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.
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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.
Best rated US stocks based on momentum ranking
Compelling technical picture:
Dow Inc. (Weekly Chart):
We are presenting this chart on a weekly timeframe. An upward trend may have already begun last week, which could signal further gains in the longer term. By exceeding 31.25, the downtrend was broken, opening the way for an uptrend. Based on this pattern, we can expect the highs from early April to be surpassed, meaning a rise to around $43.75. It’s advisable to manage risk using the thick green trendline. In the event of a retest, 28.13 must not be breached, so the best opportunity to buy with the lowest risk would be below $29.
List of stocks with a chance of a turnaround in the coming weeks
This week, we did not identify any stocks that met our screening criteria for potential reversal setups.
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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