Stock Analysis | Lyondellbasell Industries Outlook - Technical Weakness and Mixed Analyst Sentiment

Market Snapshot

Lyondellbasell Industries (LYB) is facing a technically weak setup with bearish indicators dominating the chart. The stock is currently trading higher by 10.29% recently, but technical indicators and internal diagnostic scores suggest caution.

News Highlights

Recent news affecting LYB includes:

• Safex Chemicals expands manufacturing in Gujarat: This news, while not directly involving LYB, hints at strengthening in the broader chemical industry, potentially benefiting LyondellBasell in the long run.
• US regulatory changes on vaccines and China trade restrictions: These could indirectly impact global supply chains and chemical exports, which may affect LYB’s operations in the near term.
• Asia-Pacific ETF assets hit $1.25 trillion: While not industry-specific, strong ETF inflows across Asia Pacific could reflect broader market optimism that may spill into LYB’s sector.

Analyst Views & Fundamentals

Analyst sentiment for LYB is mixed, with a simple average rating score of 2.83 and a performance-weighted rating of 2.09. These scores suggest a generally neutral to underperform outlook. Only one analyst rated "Buy", while four gave "Neutral" and one issued a "Strong Sell". This dispersion in ratings does not align well with the current price rise, which suggests potential volatility ahead.

Key fundamental factors and their internal diagnostic scores include:

• ROE: 0.96% (internal diagnostic score: 2.0)
• ROA: 0.86% (internal diagnostic score: 1.0)
• Net Profit Margin (NPM): 1.50% (internal diagnostic score: 1.0)
• CFOA: 0.99% (internal diagnostic score: 3.0)
• Cash-MV: -26.44% (internal diagnostic score: 3.0)
• Total Profit / EBIT: 61.93% (internal diagnostic score: 1.0)

These values show a mixed bag of strengths and weaknesses. While the company generates positive cash from operations, key profitability metrics are underperforming, suggesting pressure on margins.

Money-Flow Trends

Money-flow patterns for LYB show a negative overall trend with big-money (block) funds inflow ratio at 49.55% and overall inflow ratio at 49.41%. This indicates that large institutional investors are cautious or bearish, while small retail investors show a positive trend with an inflow ratio of 50.18%. The mismatch between big-money and retail flows suggests potential volatility ahead as big players may continue to take profits or hedge their positions.

Key Technical Signals

Technical indicators for LYB are overwhelmingly bearish with 4 bearish signals versus 0 bullish, and an internal diagnostic score of 1.65. This weak technical setup implies that the stock may face further downward pressure in the near term.

Here’s a breakdown of the key indicators and their internal diagnostic scores:

• WR Overbought: 1.20 (neutral bias, with 30 historical signals and an average return of -0.60%)
• WR Oversold: 1.00 (bearish bias, 88 historical signals, -0.59% average return)
• MACD Golden Cross: 3.38 (neutral rise, 10 signals, -0.58% average return)
• RSI Oversold: 1.00 (bearish bias, 23 signals, -0.62% average return)

Recent chart patterns show frequent occurrences of WR Overbought and RSI Oversold signals across the last five days. These indicators suggest overbought and oversold conditions, which can signal potential price reversals. However, the dominance of bearish indicators suggests that the current trend lacks conviction, and a pullback may be imminent.

Conclusion

Given the weak technical outlook and mixed analyst sentiment, investors should proceed with caution. While fundamentals show some strength in cash flow, key profitability metrics are underperforming. The mismatch in money flows also points to potential volatility. For now, consider waiting for a pull-back before entering, and keep a close eye on any follow-up earnings or strategic announcements from LyondellBasell Industries.