The Fertilizer Producer’s Chart May Be Showing Promise Again After a Long Time
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International Markets - Technical Analysis
The correction phase, which has lasted two to three weeks, gained new momentum last Thursday when an extremely sharp sell-off swept through the markets. As for the major stock indices, no clear buying opportunities are yet visible, although some of them have already corrected back by about half of their previous upward moves. The DAX and Stoxx 600 indices attempted to retest their previous highs but encountered strong resistance at those levels. Furthermore, gaps have formed on the charts; if these gaps remain open, it could signal the start of a new, more sustained downtrend. The index tracking emerging markets continues to move within a downtrend, though it is gradually approaching an important support zone. If it reaches this level, there is a greater likelihood of a significant rebound or a corrective phase.
The government crisis is over – what lies ahead for Romania?
Romania has experienced five turbulent months on the domestic political front. Nevertheless, after several prime ministerial candidates failed to secure parliamentary support, a new government was finally formed in late October. The Romanian equity market, which had performed strongly during the first half of the year, lost momentum towards the end of August and entered a downward correction in September. It then rebounded in October, partly reflecting the reduced risks of a snap election and a sovereign rating downgrade to below investment grade. While domestic political tensions have subsided, the BET index has yet to recover to the vicinity of its August peak. At the same time, Romanian equities no longer appear particularly inexpensive from a valuation perspective.
Despite the sharp decline, a number of previously underperforming, lagging stocks are showing signs of life. At the same time, for these stocks, we have seen almost without exception only initial, concentrated buying reactions over the past few months. However, a sustained turnaround would require the formation of higher lows and the confirmation of clear reversal patterns. In light of this, it is worth monitoring the stocks listed in the first table on a daily basis, as additional positive trading days accompanied by rising volume could significantly increase the likelihood of an emerging uptrend. We’ve selected two companies from the long list. One is Take-Two Interactive Software, which, moreover, is set to release its quarterly earnings today after the market closes, while Grand Theft Auto VI—eagerly anticipated by investors and gamers alike—is scheduled for release in ten days. The other stock we’re highlighting is Mosaic Company, one of the world’s largest fertilizer manufacturers, which is also showing an increasing number of positive technical signals following a significant drop in its stock price.
Best rated US stocks based on momentum ranking
Compelling technical picture:
Take-Two Interactive (Daily Chart):
Following a correction phase that has lasted more than three months, a strong buying reaction has emerged again in recent days, which could significantly improve the stock’s outlook. It is particularly encouraging that a decisive reversal has begun from the support zone around 187.5. For the technical picture to improve further, a breakout above the downtrend line would be necessary, and a realistic chance of this occurring may open up above the 218 level. At the same time, a key risk factor is that the company will release its quarterly earnings after today’s market close, which could trigger significant price movements in either direction. Overall, the technical picture is becoming increasingly favorable, and if the reversal trend gains traction, testing previous all-time highs could even be on the agenda in the coming months.
Mosaic Company (DailyChart): The curve has been in a downtrend for some time, interrupted from time to time by minor corrections. From a technical perspective, however, favorable reversal signals have emerged over the past three trading days. The strong buying reaction from the level around 18.75 suggests that the stock may be turning around in the short term. This could mean that during any further pullbacks, it may be worth watching for buying reactions, as the formation of a higher low could be one of the first important signs of a trend reversal. If the current reversal process is confirmed, the zone around 31.25 could once again become a target price over a multi-month time horizon. Accordingly, in the short term, one can look for buying opportunities during pullbacks. From a risk management perspective, the thick green uptrend line is of particular importance, so it is advisable to adjust the risk level in line with this trend line.
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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