Buying Opportunities Have Disappeared from the U.S. Market
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International Markets - Technical Analysis
Following the retest, the S&P 500 came under strong selling pressure once again and issued another sell signal. In the case of the Nasdaq, sellers had already taken control earlier, so the decline began sooner there. Both indices may still have room for further declines, possibly even down to the midpoint of their previous uptrends. The Russell 2000 had already been considered an underperformer, though some sector rotation supported its performance last week. The DAX and Stoxx 600 indices also corrected higher last week; however, the magnitude of these corrections has already reached the desired level and has even become slightly overbought in the short term. As a result, buying opportunities are currently less attractive. The index tracking emerging markets continues to trend downward, though it may soon reach an important support level from which a significant rally or correction could emerge.
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.
A strong wave of selling swept through the U.S. stock markets. There was significant profit-taking in the technology sector, and the sector rotation observed earlier failed to substantially improve sentiment in other segments as well. Accordingly, it is not surprising that there are currently no stocks showing reliable signs of an upward trend accompanied by strengthening momentum. Although it is still possible to rank stocks at this time, there are no opportunities with an attractive risk-reward ratio based on technical analysis. For this reason, we are not issuing a buy recommendation for any stock this week.
There is a significant chance that the stock market correction will continue, which is not favorable for momentum-based investment strategies. It is worth noting that, once again, we did not identify any stocks likely to turn around. This also indicates that the market environment has deteriorated significantly over the past week or two, and there are no buying opportunities on the U.S. stock exchanges.
Best rated US stocks based on momentum ranking
Compelling technical picture:
This week, we do not recommend any stocks for purchase.
List of stocks with a chance of a turnaround in the coming weeks
This week, we did not find any stocks that meet our screening criteria for a potential reversal.
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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