O’Neil Industry Group Rank: A technical metric (ranging from 1 to 197, with 1 signifying the best group) that evaluates
above‐average stocks within each group, along with the performance of the entire group compared with others. It employs
separate weightings for different time periods. Among the 11 industry groups we cover in the U.S. Consumer Discretionary
space , the majority ranked poorly (>100) including Apparel‐Clothing (rank 187) and Apparel‐Shoe manufacturer (rank 146).
This reflects investor concerns about reduced consumer spending in the current inflationary climate.
Apparel‐Clothing / Luxury mfg: Q2 earnings painted a grim picture as U.S. consumption drastically slowed, coupled with
growing uncertainties in China. The trend has further accelerated in Q3 as reflected by LVMH Q3 sales print that showed top
line deceleration in all its divisions.
On a relative basis, Hugo Boss (BOSSX.DE) remains our best conviction. The stock is bouncing off its 100‐WMA level of
support.
Watch out for LVMH (LVMH.FR) and Moncler (MONC.IT). These stocks are currently breaking below their 100‐WMA, a
key support level. We see further downside risk post LVMH weak Q3 print.
We see high downside risk in Hermes (RMS.FR), Richemont (CFR.CH), Kering (KER.FR), Burberry (BRBY.GB), and Prada
(PRAD.HK).
Apparel Shoe mfg: Earnings are near an inflection point as the sector has made strong progress towards excess inventory
and cost control. In our view, depressed valuations could provide some opportunities as the negative earnings momentum
cycle comes to an end.
LULU, U.S. Focus List constituent, remains a core holding in our view. Top‐rated name, the stock has recently tested its
200‐DMA before bouncing off that support level on above average volume. The stock trades 8% from pivot (~$407).
NKE has bounced off September lows after it released its Q1 earnings. The stock is now testing its declining 50‐DMA,
a key resistance level since May. Should it re‐take this level, we would recommend buying on a break above $102.
Adidas (ADSX.DE) has been consolidating over the past eight‐weeks with support at its 200‐DMA. A break above
€188.6 (pivot point), will bring more conviction that the turnaround is well in place.
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.
- European markets ended lower and had a technical rebound later in the week after being overextended to the downside. The Stoxx 600 is making a rounding top and lower lows in the process. We have a majority of the indices we track in a Downtrend or a Rally Attempt, indicating weakness in the region. Momentum is toward the downside amid a lack of market breadth. Major indices have breached support levels and are trading below their key moving averages, including their 200-DMA.
- We recommend a cautious approach to adding risk. Look for leading industry groups that are breaking out of proper bases with strong and rising RS line. Reduce risk in names that are breaking below logical levels of support.
- Sectors were flat to deeply in red. Energy and Utility led the decline, while Transportation, Technology, and Cyclical were flat.
- On our rotation chart, Financial and Basic Material are showing improvements in their short-term momentum. Staple and Utility are showing a decline in their short-term momentum.
- European Focus List Update:
- Actionable names include Universal Music Group (UNMG.NL; UMG:NA), Swedbank A (SWED.SE; SWEDA: SS), Beiersdorf (Xet) (BEIX.DE; BEI:GR), Relx (REL.GB; REL:LN), Camurus (CAMX.SE; CAMX:SS), and Technip Energies (TECE.FR; TE:FP).
- Addition: Universal Music Group (UNMG.NL; UMG:NA), Swedbank A (SWED.SE; SWEDA:SS)
- Removal: Vitec Software Group B (VITB.SE), Edenred (EDEN.FR), Ashtead Group (AHT.GB)
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index continues to underperform the market with narrow leadership amongst staples. The XLP was
flat last week (+25bps) and enjoys strong support at the $77.44 level. However it faces resistance from a declining 50-DMA which
currently lies 3% above.
O’Neil Consumer/Retail Weekly
Consumer Cyclical (XLY): The index is finding support around its 21-DMA after retaking it in late May. Next resistance
levels: $167 (-3%), which also coincides with its rising 50-DMA, followed by $163 (-6%).
O’Neil Consumer/Retail Weekly
XLP (Consumer Staples): The index is testing support at its 200-DMA after rolling over from its 50-DMA. RS line is
trending downward with weak technical ratings.
O’Neil Consumer/Retail Weekly
XLP(Consumer Staples): The index has bounced from its 200-DMA on good volume after consolidating above it on low
volume. RS line continues to trend downward with weak technical ratings owing to sector rotation towards AI and
semiconductor stocks in the last few weeks. A decisive retake of its 50-DMA should be bullish for the index
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index has consolidated above its 200-DMA on low volumes. RS line continues to trend
downward with weak technical ratings owing to sector rotation towards AI and semiconductor stocks in the last few
weeks. A decisive retake of its 50-DMA should be bullish for the index.
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index is testing support at its 200-DMA after facing resistance at its 50-DMA. RS line
continues to trend downward with weak technical ratings owing to sector rotation towards AI and semiconductor stocks in
the last few weeks.
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index has broken below all the key support levels including its 200-DMA. It is
consolidating just below its 200-DMA with immediate support at $72. RS line is trending downward with the worst possible
A/D Rating
O’Neil Consumer/Retail Weekly
Consumer Staples(XLP): The index after facing resistance at the pivot price has broken below its 21-DMA and 50-DMA
on high volume. It has immediate support at its 200-DMA. RS line has been trending sideways with RS Rating of 61. A/D
Rating has lost momentum in the last few weeks.
