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.

 

The retaliatory U.S. tariffs resulted in the European markets plunging 9.2% last week. The Stoxx 600, which is in a Downtrend, has breached all its key support levels and is now testing support around its early August 2024 levels. Next support is at 462, 6% below Friday’s close. The possibility of a tariff war emerging between two of the largest economies has spiked after China introduced counter-tariffs against the U.S. As a result, the European stock market volatility index witnessed its biggest one-day jump in over two days.
Historically, when European markets experienced sharp two-day selloffs greater than 9%—such as during the COVID-19 pandemic (March 2020; -10.8%), Brexit (June 2016; -10.9%), and the 2008 Financial Crisis (October 2008; -9.4%)—they subsequently rallied between 18% and 26% over the following 12 months. The exception was Black Monday (October 1987; -9.2%), where markets ended lower one year later. However, aside from the Brexit episode, each instance saw a further drawdown of 18–25% before bottoming, with the time to reach the bottom ranging from just over a week (COVID-19) to several months (Financial Crisis). This historical precedent suggests that while long-term recoveries are possible, the short-term downside risk remains elevated. As such, we advise investors to remain cautious and stay on the sidelines until there is greater evidence that markets have stabilized and found a durable bottom.
Leadership remains narrow, with a low number of breakouts, the number of stocks setting up their stage-one bases is at the lowest level since February 2023, and stocks trading near their pivot level are at the lowest level since late October 2022. Around 10% of the stocks in the Stoxx 600 registered a gain last week. Only ~37% of the stocks are trading above their 200-DMA, 32% above their 100-DMA, and 22% above their 50-DMA.
Among the major indices, Germany’s DAX, France’s CAC, and the U.K.’s FTSE fell 7–8% last week and are all trading below their 200-DAM support level. All European markets are now in a downtrend. The risk to the downside remains elevated. On the breach of the 200-DMA, the DAX could test support at 18,792 (5% below the current level), where the index had previously consolidated between mid-October and late-November 2024

O’Neil Consumer/Retail Weekly

Posted on by Tristan d'Aboville

Consumer Staples (XLP): The index rose ~4% in the past one week and reclaimed all its key moving averages. It is trading 2% below the pivot of its recent stage-one flat base, which is its immediate resistance level. Next resistance is at $84.35 (+3%). Support is at the confluence of its 10- and 21-DMA (-1.5%), followed by the confluence of its 100- and 200-DMA (-2%)

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 are pulling back from their 52-week highs and have breached their immediate support. Most of the markets have breached support at both their 21- and 50-DMA. Portugal is the only market trading above all key moving averages. Italy, Spain, and Sweden pulled back steadily in the last two weeks and are trading below their 21-DMA but above their 50-DMA support. Denmark is making lower lows, trading at a fresh 52-week low, and is extended to the downside. Sweden and the Netherlands have breached their 200-DMA.
Last week, sector performance was mostly negative. Utility (+3.2%) outperformed significantly in a weak broader market. Energy and Retail closed with a gain of 30–40 bps. Financial was down slightly, while Staple and Technology declined ~1%. The remaining sectors were down 2–3%, with Health Care lagging the most.
We recommend a cautious approach toward adding new ideas as indices are pulling back and breaking below key moving averages. Market breadth remains weak, with the number of breakouts lingering near historic lows. Short-term momentum is improving in defensive sectors, notably Utilities.
European Focus List Update: The number of stocks on the list has significantly decreased in the past three weeks and stands now at 17, reflecting the mounting pressure on European equities. Last week, Ferrari (RACE.IT), DSV (DSV.DK), and Moncler (MONC.IT) were removed from the list.
From our score cards, defensive stocks showing relative technical improvement (RS line rising and money inflow), and basing or breaking out of consolidation include:
In Staples: Imperial Brands (IMB.GB), Jde Peet (JDPS.NL), ABI (ABI.BE), Royal Unibrew (RBR.DK), Premier Foods (PFD.GB, FL constituent).
Utilities : Terna (TRN.IT), Enel (ENEL.IT), Acea (ACE.IT), Telecom Plus (TEP.GB)

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 markets advanced 56 bps last week as investors awaited decisions from the Fed and Bank of England. Both held their rates steady amid an uncertain tariff and growth environment. The Stoxx 600 retook its key near-term moving averages, paring gains in the last two sessions before finding support at the 10-DMA. We expect the index to continue to consolidate as the rising 50-DMA (1.3% below) catches up. Additional support is expected at the 10-DMA (40 bps below). Overhead resistance is 40 bps above the current levels.
The Stoxx 600 remained in an Uptrend Under Pressure, with a distribution day count of 3, down from 4 the week prior. Leadership remains narrow. The number of stocks setting up a stage-one base have declined to the lowest level since mid-May 2024. Although the number of failed bases has marginally improved over the past two weeks, the number of stocks breaking out and trading near their pivot remains muted. Breadth has failed to emerge with the number of stocks setting up stage-two and stage-three bases declining to near 52-week lows. We recommend taking a cautious approach while adding new ideas as indices are likely to remain choppy, with an elevated distribution day count.
Major markets in Europe also treaded water. Germany’s DAX pulled back 18 bps, while France’s CAC and the U.K.’s FTSE gained 18 bps and 17 bps, respectively. The DAX and the CAC are in an Uptrend Under Pressure while the FTSE is in a Rally Attempt.
On the sectoral front, Energy stocks led the rally as the U.S. operations in Yemen drove crude prices, followed by Utility. Both sectors are now trading above their key moving averages, along with Banking and Telecommunications. Chemicals, Autos, and Travel & Leisure witnessed sharp declines last week. Technology and Mining stocks rallied earlier in the week but pared most of their gains after hitting stiff overhead resistance.
European Focus List Update:
Actionable names include Games Workshop (GAW.GB; GAW:LN), Hermes (RMS.FR; RMS:FP), Adyen (ADYE.NL; ADYEN:NA), and Technogym (TGYM.IT; TGYM:IM).
Addition: None.
Removal: Rheinmetall (RHMX.DE; RHM GR

U.S. Staples: Why XLP’s Outperformance May Not Last

Posted on by Tristan d'Aboville

Key Points:

 

XLP’s Outperformance: A Rotation to Safety Rather Than Fundamental Strength

The recent outperformance of Staples (XLP) versus the broader market since late January has been remarkable, with a +10 percentage point gain in just two months. This surge coincides with one of the fastest market corrections in history, as the S&P 500’s decline since its February 19 high ranks among the sharpest 10% pullbacks on record.
However, it is crucial to recognize that this performance has not been driven by fundamental improvements among Staples. Neither volume growth nor price/mix dynamics are expected to see a meaningful improvement in 2025. Instead, the rally has been fueled by a rotation towards safety, driven by broader market concerns and a “flight to quality” environment.

O’Neil Consumer/Retail Weekly

Posted on by Tristan d'Aboville

Consumer Staples (XLP): The index declined ~2.1% last week. It pulled back sharply after facing resistance at $83.3 and broke below the 50-, 100- and 200-DMA. It reclaimed these moving averages but broke below them again after facing strong resistance from its declining short-term moving averages. Support is at $78.9 (-1%)

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.

 

Most European indices made a late comeback rally last week, partly paring the declines made during the first few days of the week. Italy registered an all-time high after bouncing strongly off its rising short-term moving averages. Austria, Belgium, Germany, Portugal, the U.K., Ireland, and Finland bounced off support at their 21-/50-DMA and are trading 1–3% off their 52-week highs, above all moving averages. France, Sweden, Switzerland, Spain, and the Netherlands also had a tepid bounce last week but have run into resistance at the 21-DMA. Denmark made a fresh 52-week low after a sharp pullback from above its 50-DMA.
The Stoxx 600 remains in an Uptrend Under Pressure with four distribution days. The index is testing its rising 50-DMA, a strong support level to monitor. However, breadth in Europe remains very narrow: the number of quality breakouts has declined significantly from February levels, while the number of failed breakouts has surged 4x. Leadership remains very concentrated (e.g. Aerospace and Defense). Thus, we recommend taking a cautious approach in adding new ideas as indices are likely to remain choppy, with elevated distribution days.
Sector performance was mostly negative. Energy (+2.4%) and Utility (+2.0%) were the sole gainers. Retail (-5.3%) lagged the most, followed by Health Care (-3.4%). Consumer Cyclical, Transportation, and Technology closed ~2% lower each. Consumer Staple and Basic Material were down 1% each during the week. Financial and Capital Equipment declined slightly. On our rotation chart, defensive sectors (Staples, Utilities, etc.) continue to show improving momentum (over four weeks). Capital Equipment accelerated its positive momentum led by Aerospace and Defense stocks and remained in the best quadrant.
European Focus List Update:
Actionable names include Games Workshop (GAW.GB; GAW:LN), Relx (REL.GB; REL:LN), and Technogym (TGYM.IT; TGYM:IM).
Addition: None.
Removal: Adidas (ADSX.DE; ADS:GR), Boss (Hugo) (BOSSX.DE; BOSS:GR), and InPost (INPW.NL; INPST:NA)

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 European markets took a pause this week, settling down 69 bps and tracing back to the rising 21-DMA. This marks the first weekly loss in the past 10 weeks. Although the 10-DMA and the 21-DMA have caught up, the European index is still extended from the rising 50-DMA (4% below) and the mid- to long-term moving averages (6%–7% below). We recommend investors to be more cautious here while adding names considering the recent clustering of distribution. Book gains in stocks with are extended or breaking logical levels of support.
  • Investors are monitoring developments in global trade as trade tensions remain high between the U.S., Canada, Mexico, and China as tariffs went into effect last week. The European Central Bank cut interest rates by 25 bps last week but growing focus of Germany on defense spending has raised the risk of a pause in April. Leadership in Europe is narrowing sharply with the number of breakouts plummeting to 105, less than a quarter of 426 two weeks prior and the lowest level since late December 2024. The number of stocks trading near pivot has also sunk sharply to almost quarter of mid-January highs and the lowest level since late December 2022. Meanwhile, the number of failed bases has jumped more than 4x since mid-February to 2,103, the highest level since March 2020.
  • Last week among the major indices, Germany’s DAX rose 2% and France’s CAC was flat as they continue to trade above their key moving averages. The U.K.’s FTSE breached the near-term moving averages as it declined 1.5% and could test the 50-DMA (2% below). Most European indices are taking a pause after a sharp rise to start the year and pulling back to their near-term moving averages.
  • European Focus List Update:
    • Actionable names in the Focus List include Games Workshop (GAW.GB; GAW:LN), Technogym (TGYM.IT; TGYM:IM), and 3i Group (III.GB; III:LN).
    • Addition: None.
    • Removal: Swedish Orphan (SOBI.SE; SOBI SS), Galderma (GALD.CH; GALD SW), Pandora (PND.DK; PNDORA DC), Vimian Group (VIMG.SE, VIMIAN SS), WISE (WISE.GB; WISE LN), Eqt (EQT.SE; EQT SS), Swissquote (SQN.CH, SQN SW), and Vitrolife (VITR.SE; VITR SS).