Consumer Staples (XLP): The index broke out from its weekly base. It continues to trade above its key moving averages and is
currently facing resistance at pivot price level. RS line has somewhat stabilized but technical ratings continue to remain poor.
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.
- The Stoxx 600 was shifted to a Confirmed Uptrend last week as the index hit fresh highs. It inched more than 300 bps higher for the week, driven by Utility, Insurance, and Construction stocks. Autos was the only sector that ended in the red as key original equipment manufacturers reported poor earnings. The index is now trading ~3% above its 50-DMA and ~10% from its 200-DMA. It is extended in the short term. We expect a short-term pullback toward its rising 10-DMA (2% below) before the release of key U.S. PPI and CPI data on Tuesday and Wednesday, respectively.
- On our rotation graph, most sectors are exhibiting improvement in their short-term momentum. Leading over 26-weeks, Capital Equipment is showing further strength. Energy, Financial, Basic Material, Transportation, Health Care, Utility, and Retail have been showing strong improvement in their short-term momentum. Only Technology and Consumer Cyclical continue to have deteriorating short-term momentum.
- Sector Score Cards – Stocks of Interest (Top-rated names with best technical setups – refer pages 9–20): As breadth improved in the past week, the number of breakouts in Europe increased significantly. The best-rated names based on our fundamental ratings and rankings that broke out include:
- Basic Material: Sika (SIKA.CH).
- Capital Equipment: Siemens (SIEX.DE), Informa (INF.GB), Spie (SPIE.FR), and Burckhardt (BCHN.CH).
- Financial: Generali (G.IT), Banca Mediolanum (BMED.IT), Banca Generali (BANC.IT), and Swissquote (EFL constituent; SQN.CH).
- Health Care: ALK-Abello (ALK.DK) and Amplifon (AMP.IT).
- Retail: Fluidra (FDR.ES).
- Technology: Inficon (IFCN.CH) and Gamma Communications (GAMA.GB).
- Transportation: Wallenius (WWL.NO) and Id Logistics (IDL.FR).
- European Focus List update:
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index continues to trade constructively. It gapped up on high volume to break above $76.5. On the
weekly charts, it broke out of a stage-one, 5-week long consolidation on good volume. Major constituents like Procter & Gamble (PG),
Costco (COST), Walmart (WMT) are all trading constructively. RS line however continues to trend downward with weak technical
ratings.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
Key points:
- European markets pulled back to their 50-DMA over the past week. The indices retreated 75 bps after the rally in the prior week as investors digested Q1 earnings along with commentary from the central banks. The Stoxx 600 is in a Rally Attempt and is still trading 2% off highs, with strong support from its near-term moving averages. Immediate support is at 503, which has been a reliable level for the index.
- Most sectors declined last week, while Financial Services, Utility, and Travel & Leisure gained. Autos was the worst-affected sector, slipping 3.5% as giants Volkswagen, Mercedes-Benz, and Stellantis posted lower sales on sluggish demand last week. On our rotation charts, Utility, Energy, Transportation, Financial, Capital Equipment, Retail, and Health Care showed strength in the near term.
- Sector Score Cards – Stocks of Interest (Top-rated names with best technical setups – refer pages 9–20):
- Capital Equipment: Rexel (RXL.FR), JCDecaux (DEC.FR).
- Consumer Cyclical: Michelin (MCL.FR).
- Consumer staples: Premier Food (PFD.GB).
- Financials: Bure Equity (BURE.SE), Standard Chartered (STAN.GB).
- European Focus List update:
- Addition: None.
- Removal: Straumann Holding (STMN.CH).
Actionable Names: Universal Music Group (UNMG.NL), Swissquote (SQN.CH), and Vat Group (VACN.CH).
European Weekly Summary
Key points:
• The Stoxx 600 is in a Rally Attempt as it has been able to hold its April 19 lows. With immediate support at its 50‐DMA, the market could be shifted
back to a Confirmed Uptrend if we spot a follow‐through day (up at least 1.7% with higher d/d volume) or a move above its March 28 high, which is
~1.5%away. Should the index break below its April 19 low (~499), the market would be shifted back to a Downtrend.
• European markets had a constructive bounce off their key support levels last week. The Stoxx 600 gained 1.7%, its first weekly advance in four weeks.
Technology led the gains, followed by Basic Resources. Chemicals lagged. Value and large caps continued to outperform. We continue to recommend a
patient approach in adding risk as leaders continue to consolidate near their logical support level.
• Sector Score Cards – Stocks of Interest (Top‐rated names with improving technical setups – refer pages 7–18):
o Basic Resources: Kemira (KEMR.FI).
o Consumer Staple: Lotus Bakeries (LBAK.BE).
o Financial: Natwest (NWG.GB), The Bank Group (TBCG.GB, EFL constituent).
o Retail: Jumbo (BABY.GB).
• European Focus List Update:
o Addition: None.
o Removal: Sanlorenzo (SANL.IT), Trainline Plc. (TRN.GB), Bridgepoint Grp (BPT.GB), and WISE A (WISE.GB).
o Actionable names include Tbc Bank Group (TBCG.GB) and Universal Music Group (UNMG.NL).
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index has reclaimed its 50-DMA on good volume after bouncing off its 200-DMA. It is due to the strong
performance of Procter & Gamble post its Q2 FY24 print. The index currently sits 3% below pivot.RS line has rebounded slightly with
the worst possible A/D Rating of E.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European markets declined for the third straight week, with major indices pulling back and currently at or below their 50-DMA. The Stoxx 600 is in a Downtrend and is below its 50-DMA. We recommend taking some profits in extended names. If looking to add risk, consider defensive stocks (low beta; top O’Neil stability factor) showing a rising RS line.
- Most of the 11 O’Neil sectors closed in the red. Staples outperformed while Technology and Energy declined the most. Key trends observed since the market pullback accelerated: short-term momentum in Technology continued to deteriorate further; small-caps lagged (-1.7% for the week) vs. large-caps (-1.1%); and Value (-0.8%) led on a relative basis vs. Growth (-1.5%). Over one month, Growth in Europe is now down 3.7% vs. Value down only 0.1%.
- Sector Score Cards – Stocks of Interest (Top-rated names with best technical setups – refer pages 9–20): As breadth narrowed significantly, the number of breakouts in Europe hit extreme lows. Several defensive ideas that are currently basing are showing improving technical characteristics such as a rising RS line. It includes L’Oreal (OR@F.FR) in Consumer Staples, Spire Healthcare (SPI.GB) in Health Care and Telecom stocks such as Tele2 (TEL2.SE) and Telekom Austria (TKA.AT).
- European Focus List Update:
European Weekly Summary
Key points:
• European markets declined for the third straight week, with major indices pulling back and currently at or below their 50‐DMA. The Stoxx 600 is in a
Downtrend and is below its 50‐DMA. We recommend taking some profits in extended names. If looking to add risk, consider defensive stocks (low beta;
top O’Neil stability factor) showing a rising RS line.
• Most of the 11 O’Neil sectors closed in the red. Staples outperformed while Technology and Energy declined the most. Key trends observed since the
market pullback accelerated: short‐term momentum in Technology continued to deteriorate further; small-caps lagged (‐1.7% for the week) vs. large‐ caps (‐1.1%); and Value (‐0.8%) led on a relative basis vs. Growth (‐1.5%). Over one month, Growth in Europe is now down 3.7% vs. Value down only
0.1%.
• Sector Score Cards – Stocks of Interest (Top‐rated names with best technical setups ‐ refer pages 9–20): As breadth narrowed significantly, the number
of breakouts in Europe hit extreme lows. Several defensive ideas that are currently basing are showing improving technical characteristics such as a
rising RS line. It includes L’Oreal (OR@F.FR) in Consumer Staples, Spire Healthcare (SPI.GB) in Health Care and Telecom stocks such as Tele2 (TEL2.SE)
and Telekom Austria (TKA.AT).
• European Focus List Update:
Actionable names include Universal Music Group (UNMG.NL; UMG NA, support at the 100‐DMA), Beiersdorf (BEIX.DE), and Alfa Laval
(ALF.SE; ALFA SS).
Addition: None.
Removal: Partners Group Holding (PGHN.CH).
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index has broken below its 21-and 50-DMA on good volume.It formed a negative reversal after facing
resistance at its declining 50-DMA and broke below $74. It is 6% off highs. RS line is trending downward with the worst possible A/D
Rating of E.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European markets pulled back below their short-term moving averages last week, amid increased volatility following tension in the Middle East. The Stoxx 600 along with other major indices are trading below their 21-/50-DMA with elevated distribution days. Expect consolidation or further pull back in the event of a break below key support levels. We recommend taking some profits in extended names and reducing risk in stocks that are breaching key support levels. Add risk in stocks that are part of leading industry groups and are breaking out of proper bases with a strong and rising RS line.
- O’Neil Sector Rotation: Short-term momentum continues to improve among Basic Materials, Financials, Energy, Retail, Transportation, and Utilities. Technology, Health Care, and Staples have shown further decline in their short-term momentum. Cyclicals, which is in the leading quadrant, exhibited deterioration in its short-term momentum.
- Sector Score Cards – Stocks of Interest (Top-rated names with best technical setups – refer pages 9–20):
- European Focus List Update:
