Author: Kenley Scott

Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.

Global Sector Commentary

Posted on by Kenley Scott

Key points from this report:

 

  • The table below shows the stocks we highlighted in August from those groups that were the most extended from their most recent pivots. Only five stocks, ZM, CRWD, EPAM, JD, and BLDR, are further above their 200-DMA than they were on August 21.
  • While some of that is due to rising 200-DMA, these 56 stocks also moved to an average of 17% off highs this week’s intraday lows.
  • In the final six columns, we used five potentially negative technical categories (Climax Top, Breach of 21-DMA Intraday, Close Below 21-DMA, Breach of 50-DMA, Close Below 50-DMA) and summed the number of violations (see the attached report for the full list of stocks).
  • One-third of the list has four or more violations and about half of the list has three or more violations. Of those with four or more, stocks that should probably be approached with more caution include SHOP, W, ETSY, OSTK, COUP, WIX, and MELI.
  • On the other hand, a fair number, including AAPL, NVDA, JD, SAIL, CRWD, and ZM, have just one violation.
  • All in all, we think this is in line with a change in market status to Under Pressure, which we did on Friday.

Global Sector Commentary

Posted on by Kenley Scott

Key points from this report:

 

  • U.S. election season tends to bring a bit of weakness in the runup, before the market closes the year strong, on average.
    • September is negative on average for the DJIA/NDQC, while the S&P 500 is just slightly positive.
    • October is negative on average for all three indices, and for all but two sectors (Retail/Technology).
    • November is a positive month for the S&P/DJIA, but negative for the NDQC and Tech. Health Care is a big upside standout.
    • December is best of the four-month stretch, with Industrials/Cyclicals/Energy leading but Tech/Retail lagging.
  • Once elections are over, the first year of presidencies are generally positive, with better performance when an incumbent is elected to a second term.

Omega Geracao

Posted on by Kenley Scott

Key points from this report:

 

  • Reiterating buy recommendation as shares broke out of a stage-one cup-with-handle base in late July and recently bounced from 50-DMA support to provide a secondary entry.
  • RS Rating is fairly low, but the RS line is back near all-time highs and the breakout is supported by strong recent accumulation.
  • After growing renewable capacity by nearly 6x (to 1.2GW) from 2016 to June 2020, the company has announced two major acquisitions in the past month. It now has 1.8GW of capacity.
    • July 30: purchase of five wind farms with 582MW of total capacity from Electrobras for BRL 1.5B.
    • August 23: purchase of two wind farms (50% interest) from EDF Renewables with 183MW of total capacity.
  • It also has 460MW of immediate pipeline projects from existing owners and development partners.
  • EBITDA and EPS set to expand significantly from 2020.

Scatec Solar

Posted on by Kenley Scott

Key points from this report:

 

  • After just over six months on our Focus List, we are reiterating our buy recommendation on Scatec Solar as the stock is approaching a breakout of a 14-week consolidation.
  • Slightly weak fundamental ratings: Composite Rating of 74, SMR Rating of B, and EPS Rank of 23. These ratings are set to improve following strong estimated growth in coming quarters.
  • Rising technical ratings: RS Rating of 81 up from 74 last week, Up/Down Volume ratio of 1.1, and A/D Rating of B+.
  • The number of institutional funds holding the stock nearly doubled y/y (1.8x) to 290, +13% or +33 funds q/q

Global Sector Commentary

Posted on by Kenley Scott

Key points from this report:

 

  • APAC markets are up an average of 22% since follow-through days 17-20 weeks ago.
  • Leaders in South Korea, Taiwan, India, China up 30%+.
  • Just four markets are in an Uptrend Under Pressure. The only major market under its 40-WMA is Hong Kong, which has just a 7% gain since its follow-through day in late March.
    • There is an overhang from China’s increased crackdown but it could participate eventually should global strength hold.
    • Clearly defined support resistance levels.

Neoen

Posted on by Kenley Scott

Key points from this report:

 

  • We reiterate our buy on Neoen shares as the stock emerged from a six-week consolidation after finding support at the highs of its prior base.
  • In its trading update, the company reported a decent Q2 despite some disruptions. Total secured portfolio (projects in operation, under construction, and awarded) up 35% y/y.
    • Q2 slowdown in growth from Q1 as expected given some impact from the COVID-19 otbreak as well as lower storage revenues (non-recurring gain in Q1) but solid solar revenue growth of 22% y/y. Wind down slightly.
  • Several wins, including new wind farm in Finland with PPA already signed with Google, PPA signed with Queensland, Australia for 325 MW of supply towards government’s renewable targets, and wind/solar farms in France.
  • A few weeks of negative impact from shutdown of Mexico solar plant, but restart as of late-May. Otherwise, operational/development projects on target.
  • Confirmed its 2020 EBITDA target of €270M–300M (+32% at midpoint) at a margin of ~80%. For the long term, it reiterated 2021 target of 5GW of capacity and more than €400M EBITDA in 2022.

Global Sector Commentary

Posted on by Kenley Scott

Key points from this report:

  • U.S. Technology is under some pressure on Friday after pressing the gains through Thursday.
    • The 90 Technology stocks with >=90 RS Rating were down an average of 3.5% Friday, versus average gain of 0.5% for all stocks with less than 90 RS Rating.
    • A third of those Technology stocks broke through their 21-DMA today. Notables include TWLO, RNG, COUP, TCEHY, SPLK, FSLY, CRWD, OKTA.
  • Technology is decelerating some on the Rotation Graphic. Not losing long-term momentum yet however (have seen short-term selloffs several times since April).