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

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • European stocks dropped 69 bps in the past week, marking a fourth consecutive week of decline. Friday’s move concluded a week of choppy trading as investors digested strong earnings from the telecom and energy sector against macroeconomic data such as 0.4% q/q growth in Eurozone GDP and political developments in the U.S. While Germany is expected to be the worst hit country in the Eurozone through proposed tariffs largely affecting the auto sector, pharmaceutical companies such as Zealand Pharma (ZEA.DK, -14.9%), UCB (UCB.BE; -9.3%), Bachem Holding (BANB.CH;-9.2%), and Swedish Orphan (SOBI.SE; -8.4%) also saw a sharp decline during the week due to the proposed appointment of Robert F. Kennedy Jr. to head the U.S. Department of Health and Human Services.
  • The index has been making lower lows and lower highs since falling 1.25% on October 30 with stiff resistance from the declining 10-DMA, 74 bps above. At open on Monday, November 18, the index has already taken out Friday’s lows and volumes on negative days have been high. We recommend investors become highly selective with the markets and sectors to take positions. Ideally, they should wait on the sidelines as markets remain weak on inflation and geopolitical concerns but if positions need to be taken, then we would recommend only leading names from improving sectors and constructive geographies that are breaking out of proper bases behind earnings or strong fundamental factors.
  • We are seeing leadership continue to narrow with the number of stocks breaking out falling to 355 while the stocks trading near the pivot of their bases has now slumped to 2,037, steadily trending lower from the 5,144 level in late August. The number of failed bases is concerning, with the number surging to 1,219, the highest level since early August when the index had dropped down as much as 479.8 (4.63% below).

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • European indices have retreated from their 52-week highs, with most trading near/below their 200-DMA. Among the 16 indices we track, only Belgium, Germany, Sweden, Italy, and Ireland are trading above the 50-DMA and are 2–4% off 52-week highs. Denmark continued to underperform its European peers and is 18% off highs, trending downward along the declining 21-DMA. France pulled back and is back below all key moving averages. Other underperforming markets include Austria, Finland, Portugal, and the Netherlands, all trading below their 200-DMA and 6–8% off 52-week highs. Expect further weakness in the short term as indices are breaking their key support levels.
  • We recommend a selective approach in adding risk as indices continue to exhibit weakness. Trim ideas breaching key support levels. Focus on quality O’Neil ideas within strong industry groups in constructive geographies and emerging out from proper bases or bouncing off key support levels.
  • Sectors closed mixed last week, but mostly negative. Capital Equipment outperformed with a gain of 1.6%, followed by Retail (+0.6%) and Technology (+0.5%). Utility and Consumer Staple declined 2.9% and lagged the most, followed by Health Care (-2.5%) and Energy (-2.1%). On our rotation graph, sectoral performance was mixed. In the best quadrant, Financial and Retail are exhibiting positive momentum. Consumer Cyclical, Capital Equipment, and Technology also showed short-term positive momentum. Energy and Basic Material, the only two sectors in the worst quadrant, continue to show deterioration in short-term momentum last week. Consumer Staple, Utility, and Health Care showed sharp deterioration in short-term momentum.
  • European Focus List Update:
  • Removal: None.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • Market Conditions:
  • European indices have pulled back from near 52-week highs, currently testing critical support levels around the 50- and 200-day moving averages (DMA). The region’s average distribution is relatively high at 4.8, which indicates selling pressure.
  • The Stoxx 600, in a downtrend, is facing resistance at its 200-DMA, while specific indices such as Denmark’s OMX, France’s CAC40, Austria’s ATX, Finland’s HEX25, and the Netherlands’ AEX are also noted for either underperformance or breaking below their 200-DMA.

O’Neil Consumer/Retail Weekly

Posted on by Tristan d'Aboville

Consumer Staples (XLP): The index has been under pressure in the last few weeks. It has rolled over from its declining 21-DMA and
broke below $80.48 on good volume. RS line is trending downward with weak technical ratings. Falling Up/Down volume ratio and
weak A/D Rating in the last few weeks indicate distribution in recent weeks.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 declined 1.2% last week and is finding support at the 50-DMA (10 bps below) on concerns of traffic hikes affecting major Stoxx 600 companies with significant exposure to the U.S. as odds of a Donald Trump victory narrow. Only 35% of the reporting companies on the Stoxx 600 beat estimates compared with a typical beat rate of 54%, per LSEG and Reuters.
  • The index now trades 2% below its all-time highs and faces overhead resistance from the 10-DMA (47bps above) and 21-DMA (39bps above). We expect the indices to consolidate over the next week as investors further digest earnings and the U.S. election tightens heading into its final week. Buyside has mostly priced the weak earnings in Q3, owning to slowing consumer demand in the West and the continuing woes of the Chinese economy. Hence, the price action remains limited on the downside despite sharp profit warnings and wide misses on estimates by companies such as Mercedes Benz, Porsche, and Remy Cointreau later in the week. As the charts indicate, these shares have bottomed out; we recommend that investors do not go short on these names here and wait for further details on the stimulus data from China and consumer demand in the West before taking positions in these names.
  • One of the best examples is luxury apparel stock Burberry, a long-time laggard, which jumped 14% over the past week and was among the top performers along with JDE Peet and the Thule Group. Cargotec, Mycronic, and Fortnox round the top five rally leaders of the past week. Abrdn, Eurofins, Axfood, Edenred, and Electrolux were among the worst performers, with shares plummeting after guidance cuts and broad Q3 misses.
  • European Focus List Update: Biotage, Hemnet, and Novo Nordisk were removed from our European Focus List last week. Actionable names in the Focus List include DSV (DSV.DK; DSV:DC), Swissquote ‘R’ (SQN.CH; SQN:SW), Nemetschek (NEMX.DE; NEM:GR), Novozymes ‘B’ (NZY.DK; NSISB:DC), Schneider Electric (QT@F.FR; SU:FP), 3i Group (III.GB; III:LN), Relx (REL.GB; REL:LN), Ferrari (RACE.IT; RACE:IM), and Swedish Orphan Biovitrum (SOBI.SE; SOBI:SS).

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • Last week, the Stoxx 600 had a volatile week but ultimately closed with a 1% gain, staying above all its key moving averages. The rising 21-DMA (currently 52 bps below) continues to act as a reliable near-term support. The index remains 128 bps below its all-time high recorded on September 27. European markets were cautious ahead of the Q3 earnings season, with investors also awaiting further details on China’s stimulus package. While China pledged to “significantly increase” its debt to boost the economy, additional specifics were scarce. The index may continue to tread water as it finds solid support close below, with the converging 10-day and 21-DMA (48 bps below) and the 50-day and 100-DMA (136 bps below).
  • Sector performance was mixed last week. Health Care, which had been losing momentum recently, saw a 1.7% rally and was the top-performing sector, followed by Retail, which has outperformed over both four-week and 26-week periods. Conversely, the 1.1% and 0.4% declines in Basic Materials and Energy, respectively, paused the recent surges in these sectors.
  • Banking stocks led the rally this week. BPER Banca (BPE.IT) and Banco Comercial Português (BCP.PT) were the top performers, breaking out of late-stage bases and are currently actionable. Unipol (UNI.IT), PKO Bank Polski (PKB.PL), and Banca Monte dei Paschi (BMPS.IT) round out the top five. On the downside, U.K.-based Vistry (VTY.GB) and Indivior (INDV.GB) were the worst performers in the Stoxx 600, with prices plunging after profit warnings. Long-time laggards Bayer (BAYNX.DE) and SES (SESG.FR) also saw sharp declines, approaching new lows.
  • We have not made any changes to our European Focus List over the past week. Actionable Ideas include: Nemetschek (NEMX.DE; NEM:GR), 3i Group (III.GB; III:LN), H Lundbeck B (HLB.DK; HLUNB:DC), Novozymes B (NZY.DK; NSISB:DC), Schneider Electric (QT@F.FR; SU:FP), and Nkt (NKT.DK; NKT:DC).
  • Weekly Score Cards – Stocks of Interest (Refer from page 7 to 18): Fresnillo (FRES.GB), Carnival (CCL.GB), Greencore (GNC.GB), Banco Comr. Portugues (BCP.PT), Truecaller (TRB.SE).