Consumer Staples (XLP): The index rose ~0.9% in the past one week. It pulled back slightly toward the beginning of the week but bounced
off the confluence of its 50- and 200-DMA. It is forming a stage-one flat base with a pivot of $84.3 (+2%). Support is at its 21-DMA (-1%),
followed by its 50-DMA (-2%)
Author: Tristan d'Aboville
Tristan d’Aboville is an Executive Director, Research Analyst, managing the European Research Product.
Mr. d’Aboville has more than 16 years of experience in equity research and sales. Since joining the firm in 2012, he has applied his client-centric style with analysts and portfolio managers, anticipating and exceeding their needs. He writes the well-received weekly European commentary, and follows it with a client conference call to discuss findings.
Prior to William O’Neil + Co., Mr. d’Aboville was a top-producing salesperson at Kepler Capital Markets, formerly known as Julius Baer, and at Natixis Bleichroeder, covering European equities for large U.S. institutional clients. He started his career as an equity analyst at Aurel-BGC, later moving to Natixis Bleichroeder, where he became the lead analyst for the European Hotels, Leisure and Catering Sector. He was recognized as a Top Analyst for Predictability & Recommendations by AQ Publications in 2003. Extel named him one of the top three European analysts covering the business services and hotel & leisure industries. Prior to the securities industry, Mr. D’Aboville was an auditor with Arthur Anderson.
Mr. d’Aboville earned a Master of Science in Managerial and Financial Economics from ISC Paris School of Management. Later, he studied Global Affairs at New York University. He is a Certified International Investment Analyst (CIIA).
A sportif, Mr. d’Aboville enjoys kite surfing, sailing, skiing, tennis, chess, and spending as much of his free time as possible with his wife, young daughter, and son.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
Europe’s main benchmark, the Stoxx 600, posted its first weekly decline in six weeks, falling ~75bps and adding three
distribution days. The index pulled back to its 10- and 21-day moving averages but remains constructive, trading above all key
mid- and long-term moving averages. Currently 2% below its 52-week high, it is forming the right side of a stage-one
consolidation. Key support lies at the 21-DMA (~1% lower), followed by the 50-DMA (~3% lower).
At the country level, Denmark was upgraded to a Confirmed Uptrend, while France was downgraded to Uptrend Under
Pressure. Of the 16 markets we track, 12 are in a Confirmed Uptrend, three are in a Rally Attempt, and one (France) is in an
Uptrend Under Pressure. The average distribution day count increased to 3.
Sector performance was mostly negative except the defensive sectors including Utility (+2.4%), Consumer Staple (+0.8%)
and Health Care (+0.4%). Consumer Cyclical (-4.1%) lagged the most followed by Energy (-3.0%). Transportation, Financial,
and Retail declined 1–1.7%. Rest of the sectors closed 0.2–0.8% lower.
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index rose ~3.9% in the past one week and reclaimed all its key moving averages. It is forming a stage-one flat base and sits 2% below the pivot of $84.35. Support is at the confluence of its 21- and 50-DMA (-2%), followed by its 100-DMA (-3%).
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European equities continued to rally last week, closing the prior week with a gain of 2.1%. The Stoxx600 is trading constructively along its rising 10-DMA (1% below) as it forms the right side of a stage-one consolidation. It now trades only 3% below the pivot and off March 3 highs. Next support: Converging 50-DMA and 100-DMA (-3%) and rising 21-DMA (-4%). The index could face possible resistance around the 558 level (1.6% above). Investors can start building positions as the index rises above the price point and then add to positions further as it breaks into new highs.
- Investors are digesting mixed corporate earnings, key economic data, and geopolitical developments. Markets reacted to the U.S. and China agreeing to roll back most of the recently imposed tariffs as both parties work towards a trade deal. U.S. and Iran working toward a potential nuclear deal hurt shares of companies in the energy sector while Germany backing 5% NATO defense spending target led to a rally in European defense stocks. Eurozone employment rose 0.3% q/q and 0.8% y/y in Q1 while industrial production jumped 2.6% m/m in March. Germany’s economic sentiment and U.K.’s GDP sharply outperformed Street estimates.
- Breadth broadening with growth sectors participating: Stocks which are breaking out of their bases more than doubled last week over the prior week’s level. They are at the highest level since January 31 when the index had broken out of a stage-one flat base and followed with a 5% rally over a month into new all-time highs. The number of failed bases is now about a fifth of early April levels while the number of stocks trading near their pivot levels have steadily continued to increase from mid-April. This week, growth sectors led the market, with Transportation, Retail, Consumer Cyclical, and Technology all gaining over 3%. In contrast, defensive sectors such as Consumer Staples, Utilities, and Health Care lagged on a relative basis. Market breadth is improving, as growth sectors are now participating in the rally—a development we view as expected, given that Value had become overextended about a month ago.
- European Focus List Update:
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index declined ~1.7% in the past one week and broke below all key moving averages. Support is at $75.6 (-5.4%), followed by $72.9 (-9.6%).
Best-performing IGs: Good improvement in the Industry Group Rank of Beverages-Non-Alcoholic and Food- Misc Preparation over the last eight weeks, with the Rank improving to 18 from 80 and 44 from 107, respectively.
Worst-performing IGs: Food-Confectionary and Food-Grain and Related are the groups, which showed a decline of 36 and 38 spots, respectively, over the last four weeks. Beverages-Alcoholic and Soap & Clng Preparations are the other Industry Group with poor Industry Group Ranks
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European indices continued to trade constructively last week, buoyed by the U.S./U.K. trade agreement. Germany, Italy, and Spain recorded a new 52-week high, while Austria and Portugal are trading just 1% off 52-week highs. The U.K. the Netherlands and Belgium are trading just 3%–4% off highs. Out of the 16 indices we track, most of the indices are trading above all key moving averages except for Denmark and Switzerland which are trading below 50- and 200-DMA. France, Ireland, Finland, and Norway are 4–6% off highs. Denmark retook its short-term moving averages, running into resistance at the 50-DMA and is 41% off 52-week highs.
- Last week, sector performance was mixed. Energy (+1.6%), and Financial (+1.5%) led the gain, followed by Capital Equipment and Technology. Health Care (-3.3%) lagged the most. On our rotation chart, short-term momentum of Technology and Retail is now improving while the positive momentum among Staples and Utilities is fading. Lagging over 26-weeks, Consumer Cyclical continues to show weak momentum.
- We recommend taking a gradual approach toward adding new ideas as indices are trading constructively above key moving averages. Though the market breadth has improved, the number of quality breakouts are still below historical average. However, we are also seeing a rising number of stocks forming the right-side of bases. Reduce exposure in stocks that are breaking key support levels or rolling over after facing resistance at key moving averages. Focus on ideas that are emerging from proper early-stage bases and monitor stocks retaking key resistance levels/forming the right side of base.
- Sector ScoreCards: Breadth continues to improve particularly among Financials and Capital equipment. Through our ScoreCards, these two sectors show many stocks working on the right side of a base or breaking out (cf. page 2 for stocks of interest).
- European Focus List Update:
- Actionable names include SPIE (SPIE.FR; SPIE:FP), Games Workshop (GAW.GB; GAW:LN), Medacta Group (MOVE.CH; MOVE:SW), Premier Foods (PFD.GB; PFD:LN),3i Group (III.GB; III:LN), Sap (Xet) (SAPX.DE; SAP:GR), and RELX (REL.GB; REL:LN).
- Addition: Scout24 (Xet)(G24X.DE; G24:GR), Medacta Group (MOVE.CH; MOVE:SW).
- Removal: None
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP):. The index gained ~0.9% in the past one week. It is trading sideways along its merging 50- and 200-DMA. It is
forming a stage-one flat base with a pivot of $84.35 (+4%). Support is at its 50-DMA (-0.4%), followed by its 200-DMA (-0.7%).
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European markets rallied 3.1% last week, with a 1.7% gain on Friday, capping off a 16% rally of early April lows. Investors are reacting positively to earnings, better-than-expected job growth, steady unemployment reports from the U.S. and de-escalation of U.S.-China trade tensions as Beijing signals that it is open to discussions. While the April Eurozone CPI figures remained above the ECB’s target and marginally higher than expectations, the path to further rate cuts remains open as the hit from U.S. tariffs and uncertainty could drag economic growth over subsequent quarters.
- The Stoxx 600 now trades just 5% off its early March highs and above all its key moving averages after reclaiming the 100-DMA (529; 1.4% below) and 50-DMA (533; 59 bps below) last week on good volume. After the sharp rally, we expect the index to consolidate between 547 (2% above) and 529. The number of stocks breaking out steadily rose over the past three weeks, while the number of failed bases dropped sharply over the past four weeks. As European indices continue their V-shaped recovery, we recommend investors cautiously add positions in ideas emerging from proper early-base setups while monitoring stocks which are extended and breaking below near-term moving averages or rolling over after facing resistance.
- On the sectoral front, all except Mining (-0.5%) closed in the green. Banks, Chemicals, Retail, and Financial Services are now trading above their key moving averages as Utility, Telecom, and Food & Beverage are trading near or making new highs. Health Care (+5.4%), Technology (+4.9%), and Travel & Leisure (+3.3%) led the rally last week but now face significant overhead resistance from their respective declining 50-DMA. Oil & Gas, Autos, and Mining continue to lag the broader market
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP):The index declined ~1.2% in the past one week. It is above all key moving averages and is consolidating near its
short-term moving averages and 50-DMA. It is forming a stage-one flat base with a pivot of $84.35 (+4%). Support is at its 50-DMA (-0.4%),
followed by its 200-DMA (-0.8%).
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- The Stoxx 600 was upgraded to a Confirmed Uptrend last Wednesday after it recorded a follow-through day, gaining 1.79% on volume higher than the previous day – a key technical signal. France, Germany, and Austria also registered a follow-through day and were upgraded to a Confirmed Uptrend. Of the 16 indices we track across the region (including the Stoxx 600), 10 markets are now in a Confirmed Uptrend.
- Last week, sector performance was mostly positive. Consumer Cyclical (+4.3%) led by Autos, Basic Material (+4.1%), and Technology (+3.7%) led the gains. Defensive Consumer Staple (+0.8%) and Utility (-0.1%) lagged on a relative basis. As shown in our Sector Score Cards, leadership is emerging among Consumer Cyclical, Capital Equipment, and Financial, as many stocks are breaking out of or forming the right side of their base after bottoming out two weeks ago.
- We recommend taking a gradual approach toward adding new ideas as indices bounced off their recent lows. Reduce exposure in stocks that are breaking below their key support levels or rolling over after facing resistance at their key moving averages. Focus on ideas that are emerging from proper early-stage bases and monitor stocks retaking their key resistance levels.
- European Focus List update:
