European Weekly Summary

Key points from this week’s report:

  • The Stoxx 600 is in a Confirmed Uptrend. Last week, 11 indices in Europe, including the Stoxx 600, France, Germany, and the U.K., moved to a Confirmed Uptrend after a follow‐through day. However, we recommend that investors remain patient in adding risk to the portfolio: volatility remains high and most stocks are a long ways away from forming sustainable uptrends. The number of stocks breaking out of consolidation remains extremely low.
  • The move last week was broad base but particularly strong among oversold areas of the markets. All sectors but Oil
    & Gas and Basic Resources closed the week in positive territory. Leading groups included Banks, Autos, and Technology. Our rotation chart continues to show short‐term momentum (over four weeks) improving in Basic Materials, Staple, and Health Care. Utility, Financial, and Retail show further weak short‐term momentum (over four weeks).
  • European Focus List Update:
    o Actionable names in the Focus List include Novo Nordisk (NON.DK, NOVOB:DC), Ipsos (IPS.FR; IPS:FP), Compass Group       (CPG.GB;  CPG:LN),AstraZeneca (AZN.GB; AZN:LN), Axfood (AXFO.SE; AXFO:SS), Solaria (SEM.ES; SLR:SM), and Salmar (SALM.NO; SALM:NO).
    o New additions last week: AstraZeneca (AZN.GB) and Axfood (AXFO.SE).
    o No removals

O’Neil Consumer/Retail Weekly

Consumer Cyclical (XLY) The index is trading 24% off-highs as the Ukraine conflict caused higher commodity pricing
and broader inflation. This is leading to money outflow towards more defensive sectors. We recommend investors to be
patient and allow the names from the index with robust RS Ratings to consolidate above their 50-DMA before taking
positions. The index is trading below its key moving averages.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The Stoxx 600 is ina Rally Attempt. The index has been able to hold its March7 low, regaining 6% from its bottom. It is now likely to retest its declining 21‐DMA, 4% away. We remain very cautious on the overall market. Unless we spot a new follow‐through day, we recommend investors avoid adding risk to the portfolio and focus on stocks displaying strong relative strength and trading above key levels of support.
  • Our rotation chart shows short‐term momentum (over four weeks) continuing to improve in Basic Materials, Consumer Staple, and Health Care. Utility, Financial, Retail, and Transportation continue to show weak trends in their short‐term momentum (over four weeks).
  • European Focus List update:
    o Actionable names in the Focus List include Aker Bp (AKEP.NO; AKRBP:NO), Novo Nordisk (NON.DK, NOVOB:DC), Ipsos (IPS.FR),     and Salmar (SALM.NO).
    o New additions last week: Solaria (SEM.ES), Salmar (SALM.NO), and Ipsos (IPS.FR)
    o Four removals: ASML (ASML.NL), Beneteau (CHBE.FR), San Lorenzo (SANL.IT), and Airbus (AIRS.FR).

O’Neil Consumer/Retail Weekly

Churchill Downs (CHDN; $7.8B marketcap): We are adding Churchill Downs to our U.S. Focus List as the stock is
breaking out of a twelve week long double bottom after posting strong Q4 FY21 results. The pivot range is at $242–245.
Churchill Downs is a live racing, gaming, and online wagering and gaming entertainment company. It conducts the iconic
event, the Kentucky Derby. The company also owns and operates multiple casinos and historical racing machines
across the country alongwith one of the largest online thoroughbred wagering platforms in TwinSpires. With the
company’s exposure to segments expected to drive post-pandemic growth due to the reopening of such live racing,
gaming entertainment, and wagering events, we believe the stock would perform well in the upcoming quarters. See our
report

European Weekly Summary

Key points from this week’s report:

Key points:

  • It was particularly a bearish week for European markets, which fell the most since March 2020. The Stoxx 600 is in a Downtrend. The index is now poisedfor a bear market, trading ~17% off its recent highs, amid widespread pessimism and negative investor sentiment as stagflation looms. Last week, the index breached support near ~434; it has next support near ~408.
  • We maintain a cautious view on the overall market as the major indices are trading below their key moving averages. We recommend
    a patient approach to adding risk. Continue to focus on ideas showing strong relative strength while reducing exposure to lagging ideas.
  • All sectors closed in the red last week. Energy declined the least, while Consumer Cyclical declined the most. On our rotation chart, Basic Materials, Consumer Staple, and Health Care showed improving short‐term momentum (over four weeks). Utility, Financial, and Transportation stocks continue to show weak trends in short‐term momentum (over four weeks).
  • European Focus List Update: We added none and removed eight. We removed Watches of Switzerland Group (WOSG.GB), Vinci (DG@F.FR), Schneider Electric (QT@F.FR), Coface (COFA.FR), Dnb Bank (DNB.NO), Yougov (YOU.GB), Finecobank Spa (FCBK.IT), and Richemont N (CFR.CH). The list currently consists of 13 stocks, overweighted toward Health Care.
  • Actionable names in the Focus List include Aker Bp (AKEP.NO; AKRBP:NO), Novo Nordisk (NON.DK, NOVOB:DC), and Oci (OCIO.NL; OCI:NA).

O’Neil Consumer/Retail Weekly

L’Occitane Intl. (LOIS.HK; $5B market cap): We are removing L’Occitane International from our Developed
Markets Focus List on technical and fundamental grounds. The stock had been under pressure in recent weeks,
losing more than 20% since breaking out of a stage-four consolidation. It broke below its 50- and 200-DMA on high
volume. It also broke below the key support level of HKD 28. The next major support is at HKD 24.25 (~8% below
the current price levels). RS line has started to trend downward with a weak technical profile. A/D Rating and
Up/Down Volume ratio have fallen significantly, indicating distribution. Geopolitical tensions could hamper revenue
growth in the upcoming quarters. Europe contributes about 16% of its sales while Russia contributes 4% to
revenue. A sustained surge in inflation in Europe could also subdue the demand environment in Europe and the
U.S. See our report here.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 is in a Downtrend along with twelve European markets out of 17. The Stoxx 600 was moved back to a Downtrend last Monday after the index undercut January lows.  The news updates on the Russia-Ukraine took center stage, dictating the market direction. In the later part of the week, the Russian invasion of Ukraine led the markets lower; however, there was a recovery on Friday in risk assets across the globe to close above the week’s low. The market status will shift to Rally Attempt Tuesday should recent lows hold, at which point a second follow-through day will need to occur before moving back to a Confirmed Uptrend.
  • We maintain a bearish view on the overall market as major indices are trading below their key moving averages. We recommend a patient approach to adding risk. Continue to focus on ideas showing strong relative strength while reducing exposure to lagging ideas.
  • Health Care sector led the markets last week, while the financial sector lagged. On our rotation chart, Energy, Materials, and Consumer Staple showed improving short-term momentum (over four weeks). Tech, Capital Equipment, and Retail stocks continue to show weak trends in short-term momentum (over four weeks).

O’Neil Consumer/Retail Weekly

Century Pacific (CPF.PH; $1.8B marketcap): Century Pacific Foods is the largest canned food company in the
Philippines. The company manufactures, distributes, and markets processed fish, meat, dairy, and coconut under its own
brands as well as others. We are removed Century Pacific Foods from our Emerging Markets Focus List on technical
deterioration. The stock has been under pressure recently, losing 16% in the last three weeks. It broke below its 50- and
200-DMA on high volume. It also broke below its key support level of PHP 24.5 Century’s fundamental story remains
intact. It reported strong Q3 results. Revenue grew 20.6% y/y, beating estimates by 1%, while adjusted EPS grew 24%
y/y, beating estimates by 6%. Consistent with our thesis, sales from OEM products were solid, growing 49% y/y, driven by
a faster reopening of global markets. The company is also expanding capacity at its coconut processing plant in Mindano.
Margin pressure due to a surge in input costs could be a reason for the stock’s underperformance. RS line is trending
downward with an A/D Rating of C-. Up/Down Volume ratio has also fallen in the last few weeks, indicating distribution.
See our report here.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 was downgraded to a Downtrend after the index breached January 24 low. We recommend a defensive approach given the downgrade to several European markets that occurred recently.
  • From our rotation chart, short-term momentum (over four weeks) continues to improve in Energy and Financial and accelerating among defensive Consumer Staples.
  • European Focus List Update: Added Oci; Removed Rvrc Holding, Infineon, Teleperformance, and Indutrade.
  • Actionable names in the Focus List include B&M European Val.Ret (BME.GB), Coface (COFA.FR), Compass Group (CPG.GB), Oci (OCIO.NL), Sanlorenzo (SANL.IT), Vinci (DG@F.FR).