We released our Weekly Global Laggards Report yesterday (please click here to access the report). The stocks
highlighted in this report are laggards relative to their own domestic markets. We recommend that they be underweighted
as they may be vulnerable to further downside risk and underperformance. European names highlighted this week include
Johnson Matthey (JMAT.GB; JMAT:LN), Safran (SGM.FR; SAF:FP), Buzzi Unicem (BZU.IT; BZU:IM), Burberry (BRBY.GB;
BRBY:LN), Carlsberg B (CAB.DK; CARLB:DC), HargreavesLansdown (HL.GB; HL/:LN), Gn Store Nord (GSN.DK;
GN:DC), The Swatch Group (UHRN.CH; UHRN:SW), Ericsson (SL@G.SE; ERICB:SS), and BT Group
(BT,A.GB; BT/A:LN).
Author: admin
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq staged upside reversals, rallying from early session losses
to close relatively flat on the day. Support remains the rising 50-DMA (S&P 500: 4,434; Nasdaq: 14,866) for both indices. The distribution
day count remains low at two and three, respectively, with one day expiring on both indices next week.
Won Europe Today
Yesterday,
- We downgraded the Stoxx 600 to an Uptrend Under Pressure as the index breached its 50-DMA on good volume
and the distribution day count increased to seven. Markets were under pressure due to an increase in inflation in
the U.K. We recommend that investors maintain a selective approach due to downgrades in major markets and the
elevated distribution day count. Allocate risk in select markets like Norway and Portugal, focusing on constructive
ideas with rising relative strength. - On the sectoral front, Luxury stocks continued to be under pressure and further declined after China tightened
restrictions on casino operators in Macau. In the recent years, the gaming hub of Macau has emerged as an
alternative for tourists to Hong Kong, which boosted luxury spending in the country. Luxury names like LVMH
(LVMH.FR; MC:FP) was down 3.96%, Moncler (MONC.IT; MONC:IM) declined more than 5%, and Kering (KER.FR;
KER:FP) fell 4%. Hermes (RMS.FR; RMS:FP Focus List stock) has been the most resilient and is trading above its
100-DMA. This led to a fall of more than 100bps in Travel & Leisure stocks. Oil & Gas and Basic Resources were
the only sectors to end in positive territory. - Among other major indices, France’s CAC declined more than 100bps, breaching its 50-DMA and recording a
distribution day. Next level of support is at its 100-DMA at 6,558. The index is in an Uptrend Under Pressure with
eight distribution days. Germany’s DAX continued to trade below its 50-DMA and recorded a distribution day. The
U.K.’s FTSE declined only 0.25% but recorded a distribution day. - Barring Austria, Norway, and Luxembourg, all the markets ended in negative territory. The average distribution day
count increased to 6.75 from 5.18 last week, which remains a concern. Of the 17 indices we cover, only eight are in
a Confirmed Uptrend compared to 10 last week. - Among our Focus List, Consumer Cylical stocks are the worst performers with Puma (PUMX.DE; PUM:GR) and
Trigano (TRI.FR; TRI:FP) trading below their 50-DMA. - Actionable names in the Focus List include Rentokil Initial (RTO.GB; RTO:LN), Carl Zeiss Meditec (AFXX.DE;
AFX:GR), Interroll (INRN.CH; INRN:SW), and B&M European Value Retail (BME.GB; BME:LN). We added Halma
(HLMA.GB; HLMA:LN) to our actionable list as the stock broke out of a stage-one flat base on good volume.
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq recovered off intraday lows and closed near session
highs. The Nasdaq regained its 21-DMA (15,066), while the S&P 500 bounced off support at its 50-DMA (4,431). The distribution day
count remains at two on the S&P 500 and three on the Nasdaq.
Pandora
Overview
Pandora, the world’s largest jewellery brand, gapped up 7% on ~2.5x daily average
volume yesterday after a warmly received Capital Markets Day. Management unveiled
new sales and profit targets, which were above street estimates. The stock is now
forming the right side of a stage-two base, decisively breaking above its 50-DMA. A
break above pivot at DKK 880 would be constructive and would provide an opportune
entry point into one of the most exciting growth stories in Europe. The stock’s technical
metrics, when viewed through an O’Neil lens, are good: RS Rating 76, RS line trending
higher, and A/D Rating of B- reflects good institutional interest.
Won Europe Today
Yesterday,
- European markets were flat on concerns of rising COVID-19 cases in China. Luxury stocks were the worst
affected and led the decline. We recommend a patient approach to increasing risk given the last week’s action.
Look for indices to hold and rally from near-term levels of support first before adding risk. - The Stoxx 600 found support at its 50-DMA and avoided a distribution day. The index is in a Confirmed Uptrend and
might be downgraded to an Uptrend Under Pressure if it breaches its 50-DMA and records a couple of distribution
days. On the sectoral front, Travel & Leisure stocks were the worst decliners while Oil & Gas stocks outperformed. - Among other major indices, France’s CAC recorded a distribution day, taking the count to seven, and found support
at its 50-DMA. Germany’s DAX found resistance at its 50-DMA as it gained on higher volume. The U.K.’s FTSE
recorded a distribution day as it lost on higher volume. Other markets to end in the green were Italy, Austria,
Denmark, Sweden, Switzerland, and the Netherlands. - Finland was downgraded to an Uptrend Under Pressure as it breached its 50-DMA. Eight of the 17 markets are
now in an Uptrend Under Pressure due to weakness in markets since last week. - De Longhi (DLG.IT; DLG:IM) was removed from our actionable list as the stock declined on heavy volume
yesterday. - We added Rentokil Initial (RTO.GB; RTO:LN) to our actionable and Focus Lists as the stock is breaking out of a
stage-one 40-week consolidation base on average volume and is trading close to its all-time high. - Carl Zeiss Meditec (AFXX.DE; AFX:GR) was also added to our actionable list as the stock is about to break out
from a stage-two flat base. - Other actionable names in the Focus List include Interroll (INRN.CH; INRN:SW) and B&M European Value Retail
(BME.GB; BME:LN).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq reversed off early session gains to close just above their
respective 50-DMA (S&P 500: 4,429; Nasdaq: 14,845). Both indices avoided distribution, keeping the count low at two and three,
respectively.
JD SPORTS FASHION
O’Neil Methodology
• After breaking out of a stage-one-five-week consolidation base, the
stock is extended from its buy range of GBX 985–1,034.25. It is currently
trading 15.75% above its 50-DMA (GBX 967.44)
• In the last five years, JD had a sales CAGR of 32%, driven by store rollout
and strong like-for-like sales growth and EPS CAGR of 14%, reflecting
the merits of its business model. Fundamental ratings are strong. EPS
Rank of 90, Composite Rating of 90, and SMR Rating of B. Strong
relationships with key brands such as Nike and Adidas afford JD a strong
competitive moat and should drive LFL sales growth in the future (along
with a burgeoning digital presence).
Won Europe Today
We released our Weekly European Summary yesterday (please click here to access the report). Key points include:
- The Stoxx 600 lost 117bps last week, its second consecutive week of loss. The index has found support at its 50-
DMA and thus remains in a Confirmed Uptrend with six distribution days. - Of the 17 indices we cover, 10 are in a Confirmed Uptrend and seven in an Uptrend Under Pressure. We
downgraded Belgium, Switzerland, and Germany to an Uptrend Under Pressure and upgraded Norway to a
Confirmed Uptrend. - All the sectors closed in the red, barring Consumer Cyclical. Health Care and Utility stocks were the major
decliners. Our rotation chart highlights the positive short-term momentum (over four weeks) among the leading
(over 26 weeks) Health Care, Capital Equipment, and Consumer Staple stocks. Utilities and Technology, which
have been underperforming for over 26 weeks, also continue to show improving short-term momentum. Inversely,
the short-term momentum of Consumer Cyclical, Transportation, and Basic Material stocks continues to weaken. - We did not make any change to our Focus List last week. Actionable names in the Focus List include De Longhi
(DLG.IT; DLG:IM), Interroll (INRN.CH; INRN:SW), and B&M European Value Retail (BME.GB; BME:LN). - European Watch List: Refer to page 3. It includes Arkema (AKE.FR; AKE:FP) and Fortnox (FORT.SE; FNOX:SS).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq closed mixed and remained volatile after last week’s
pullback off highs. The Nasdaq is testing its 21-DMA (15,089), while the S&P 500 is pulling back to its rising 50-DMA (4,427). The
distribution day count stands at two and three, respectively.
