Consumer Staples (XLP): The index is recovering from the recent declines. It gained around 1.7% last week and reclaimed its 10-DMA. It is testing resistance at its 21-DMA (+0.7%), which has crossed below the 200-DMA (+2%). Support is at 10-DMA (-0.5%) followed by recent lows ($75.8; -2.4%)
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 indices rallied strongly last week. Germany, the U.K., and Norway closed at a new all-time high, while Austria printed a new 52-week high. France, Italy, the Netherlands, Sweden, and Switzerland retook their 200-DMA. Belgium, Spain, and Sweden are trading 1–2% off 52-week highs. Ireland, Finland, Portugal, and Denmark are the only four countries trading below their 200-DMA. Denmark was the only index which posted a decline last week, closing at a new 52-week low. All sectors except Transportation and Health Care closed in the green.
- We recommend adding risks as the indices are breaking into new 52-week highs/retaking key resistance levels. Focus on quality O’Neil ideas within strong industry groups and emerging out from proper bases or bouncing off key support levels.
- Most sectors closed higher, led by Consumer Cyclical (+4.7%), Financial (+3.9%), and Technology (+3.7%). Transportation and Health Care lagged the most and declined ~1.2% each. The rest of the sectors gained 1.7–3.3%.
- On our rotation graph, sectoral performance was mixed. Energy, Utility, and Staples exhibited strong short-term positive momentum. Materials and Consumer Staples have been strengthening over the last four weeks. Cyclical, Retail, Health Care, and Technology continue to exhibit negative short-term momentum. Financial and Capital Equipment remained in the best quadrant and is showing stalling action.
- European Focus List Update:
- Watch List: Aq Group (AQ.SE), Ictl, Hotels Group (IHG.GB), Saint Gobain (SGO.FR), Efg International (EFGN.CH), Fresenius ( Essilorluxottica (EI.FR), and Ahold (AD.NL).
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index declined ~1% last week and continues to trade below all key moving averages. It faces strong
resistance from its declining short-term moving averages, which have crossed below long-term moving averages. Next support is
near July 2024 lows of $75.9, followed by April 2024 lows of $72.9
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European markets rose 65 bps last week, bouncing off the 10-DMA and going on to reclaim all their key support levels. Friday’s move saw the markets breach their 100-DMA and 200-DMA before testing support at the 21-DMA. The index continues to trade in a range-bound manner and could decline up to the 490 level (2.9% below). Norway, Italy, Austria, and Germany markets are constructive while Sweden, Portugal, the Netherlands, Ireland, Finland, Denmark, and Switzerland remain weak and trade below their key moving averages.
- We remain cautious on the European markets and recommend that investors reduce positions in names breaking below logical levels of support and revisit the names when they set up a base. Leadership remains narrow as nearly 55% of the stocks on the Stoxx600 trade below their 50-DMA while the number of stocks failing their bases inched higher last week from the prior week’s levels. Stocks trading near their pivot fell to a four week low.
- On the sectoral front, Health Care outperformed as five out of the six leading stocks on the Stoxx600 last week belonged to the sector. Ex-FL stocks Ambu (AMB.DK) and Sartorius (SRT3X.DE) were two of the top three rallying stocks with gains of 29.4% and 11.7%, respectively. Ambu raised its fiscal year targets while Sartorius benefitted from a broker upgrade. Other names from the sector such as Sartorius Stedim Biotech (DIM.FR), Tecan (TECN.CH), and Demant (WDH.DK) are staging a strong recovery from lows with gains of 10.7%, 10.6%, and 9.3% respectively. U.K.-based grocers and retailers such as Greggs (GRG.GB; -25.5%), Marks and Spencer (MKS.GB;-14.5%), Ocado Group (OCDO.GB; -13.9%), and B&M (BME.GB; -12.2%) slumped on weak outlook on the U.K.’s economy and concerns of reduced consumer spending in 2025
- Among the major indices, the DAX rose 1.6%, as it tests support at its 21-DMA, 1.5% off highs. The CAC climbed 2% and now trades above its 50-DMA (1.3% below), 21-DMA (73 bps below), and 10-DMA (37 bps below). The U.K.’s FTSE, which has been in consolidation since July had a slight gain of 30 bps last week as it tests support at its 100-DMA. A break above the 8,414 level (2% above) will be a bullish indicator for the index.
- European Focus List Update:
- Addition: BE Semiconductor Industries (BESI.NL).
Select Ideas from the 2025 ICR Conference
The ICR Conference starts on Monday, January 13, With Participation From Top Consumer and Retail Names
The year 2024 saw three themes of health and wellness, innovation and experience-driven consumption playing out strongly in the consumer and retail space.
Top names from these sectors will be participating in the ICR conference and investors can look for management insights into health and discretionary spending trends of the U.S consumer along with expectations for their sectors heading into 2025. Key insights can also be gained on lagging stocks about a potential turnaround.
Twenty-two key names across various categories such as supermarkets, food products, restaurants, apparel retailers, footwear manufacturers, athletic brands, fitness centers, and furniture manufacturers have been highlighted.
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP):The index rolled over after hitting resistance at its 200-DMA. It faces stiff resistance from its declining 10-
DMA, which has crossed below its long-term moving averages. Support is at its July low of $75.7 (-2%).
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Major European indices traded sideways last week, holding their recent support levels. Norway outperformed significantly, driven by strong upside moves in the lagging oil and gas stocks, clearing above all key moving averages and trading 2% off its 52-week high. Finland, France, Ireland, Italy, Spain, Sweden, and Switzerland are facing stiff resistance at the 21-/50-DMA. Denmark has traded sideways after the December gap down and is 28% off highs. Portugal, the Netherlands, and the U.K. retook their 50-DMA last week and are trading slightly above the same. Austria, Belgium, and Germany continued to trade constructively and are 2–3% off their 52-week highs.
- We are cautious on the European markets as half of the indices under our coverage are nearing crucial levels of resistance with a low number of breakouts. Reduce exposure in ideas that are breaking below their support levels. Focus on O’Neil ideas that are within constructive geographies and emerging out from proper bases or holding their short-term support levels.
- Sectors closed mixed last week, with Energy (+5.3%) and Utility (+2.7%) gaining the most. Consumer Cyclical (-1.6%) underperformed the most. Basic Material, Consumer Staple, and Retail declined 0.4–0.7%, while the rest of the sectors gained 0.1–0.7%. On our rotation graph, sectoral performance was mixed. Energy, Utility, and Consumer Staple exhibited strong short-term positive momentum. Basic Material, Consumer Cyclical, and Transportation have been witnessing strengthening momentum over the last four weeks. Retail, Health Care, and Technology continue to exhibit negative short-term momentum. Financial and Capital Equipment remained in the best quadrant and are showing stalling action.
- European Focus List Update:
- Watch List: Marie (MT.IT), Belimo (BEAN.CH), Kardex (Karn.CH), Do Co (DOC.AT), Gtt (GTT.FR), Van Lanschot Kempen (VLK.NL), Xvivo Perfusion (XVIV.SE).
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP):.The index continued to perform weak. It tried to recover from recent declines but has rolled over again
after facing strong resistance from the short-term moving averages. It has breached its 200-DMA support and is below all key moving
averages. Support is at July lows of $77.2 (-2%). RS line is trending downward, with a low RS rating of 55, and worst-possible
Acc/Dist Rating of E.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- During the holiday-shortened week, European markets rose 99 bps, although on very low trading volume. The Stoxx 600, which remains in a Rally Attempt, still trades below its key moving averages and faces initial resistance at its declining and converging 10-DMA and 50-DMA, 1% above. The 200-DMA, 1.2% above, and the 21-DMA, 1.4% above, are additional resistance levels.
- Overall leadership in Europe remains narrow, and the region continues to see elevated risk levels due to political uncertainties in France and Germany, a sluggish Chinese economy, and tariff threats. Despite these threats, markets have found comfort in the attractive valuations compared with lofty valuations in the U.S. market, where concentration risk is also a major concern as the top 10 stocks in the S&P 500 make up about 35% of its value – the highest proportion since the 1970s, per Reuters.
- Cautious cuts by the European central banks could be viewed favorably by investors, and with tariffs imposed by the incoming U.S. administration, the Fed could slow or pause rate cuts, making Europe an attractive market, especially in the first half of 2025.
- While most top gainers in the Stoxx 600 this week were names such as Aixtron, Novo Nordisk, Forvia, and Worldline, enjoying a bounce off lows, few names, such as Indivior (+8.9%), Sydbank (+6.3%), and Maersk (+5.1%), are setting up bases and outperforming the broader markets. Vistry Group (-14.6%) was the worst performer this week, following a third profit warning, while Evolution (-6.8%) shares fell on the news of an investigation by the U.K. authorities, and Delivery Hero (DHER.DE) declined as Taiwan FTC blocked Uber’s $950M takeover of Foodpanda’s Taiwan business.
- Actionable names on the Focus List include DSV (DSV.DK; DSV DC), Netcompany (NGP.DK; NETC DC), Schneider Electric (QT@F.FR; SU FP), Talanx Aktgsf (TLXX.DE; TLX:GR), Lottomatica Group (LOTG.IT; LTMC:IM), and Technogym (TGYM.IT; TGYM:IM).
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European indices continued their decline last week on the back of tepid economic sentiment in the region and tracking the global market weakness. Austria and Germany are the only two major indices trading above their 50-DMA: 3–5% off 52-week highs. Belgium also remained constructive, just 3% away from the 52-week highs, but trading below a flattish 50-DMA. Most indices are trading below their 200-DMA with weak technical setups. Denmark lagged the most, trading 32% off 52-week highs, after Novo Nordisk (NON.DK) dropped 20% following disappointing trial results of its latest weight-loss drug CagriSema. All sectors closed negative with Health Care and Basic Material dropping the most.
- We are cautious on the European markets as most indices are trading below key moving averages with broken technical profiles. Reduce exposure in ideas breaking support levels. Focus on O’Neil ideas within constructive geographies and emerging out from proper bases or holding short-term support levels.
- Sectors closed negative last week declining >1.5%. Health Care (-4.4%), Basic Material (-3.9%) and Energy (-3.3%) lagged the most, while the rest declined between 1.5–2.5%. Cyclical (-1.6%), Retail (-1.8%), and Technology (-1.9%) outperformed on a relative basis.
- On our rotation graph, sectoral performance was mostly negative. Financial and Capital Equipment are the only two sectors in the best quadrant. However, in the last two weeks, both the sectors are exhibiting lethargy. Technology and Utility took a pause while Cyclical and Basic Material exhibited some short-term positive momentum. Retail showed major weakness in the last week and moved out of the best quadrant. Consumer Staple, Transportation, and Health Care also continue to see deterioration in short-term momentum.
- European Focus List Update:
