Stocks at the bottom of FEZ
On Monday, December 14, 2015, the stocks at the bottom of the SPDR Euro Stoxx 50 ETF (FEZ) were Repsol, Eni (EAA), Total (TOT), Banco Santander (SAN), Unicredit (UNCFF), and Telefonica (TEF). These stocks returned -3.8%, -2.9%, -2.9%, -3.5%, -3.2%, and -3%. Among all of the stocks, the oil and gas stocks were the biggest losers.
Reasons behind the performance
After the outcome of OPEC’s (Organization of Petroleum Exporting Countries) meeting on December 4, 2015, oil prices followed the downtrend. OPEC didn’t agree to reduce the production. Due to the oversupplied crude oil market, crude oil prices fell to a multiyear low and created a panic sentiment in investors’ minds.
The YTD (year-to-date) return of the United States Oil (USO) and the Energy Select Sector SPDR ETF (XLE) were -45%, and -24%, respectively, as of December 14, 2015. The YTD return for oil and gas stocks like Total, Eni, and Repsol were -4.5%, -8.7%, and -34%, respectively, as of December 14, 2015. Now, let’s analyze the stocks’ performances using their moving averages. The above chart shows the moving averages, forward target prices, and returns of Total, Eni, and Repsol.
Moving average analysis
Total was trading 7%, 10%, and 9% below its 100-day, 50-day, and 20-day moving averages, respectively. Eni was trading 11% below its 100-day and 50-day moving averages. It was trading 10% below its 20-day moving average. Repsol was trading 16%, 10%, and 11% below its 100-day, 50-day, and 20-day moving averages.
Analysts’ estimates indicate upsides of 17%, 20%, and 34% for Total, Eni, and Repsol, respectively, from their current levels as of December 14, 2015, over the next 12-month period.
In the next part, we’ll discuss how the Japanese market (EWJ) performed on December 14, 2015.