Top 3 FTSE 100 index stocks for 2022 face technical hurdles
- The FTSE 100 index has outperformed US indices.
- Shell is the best performer, helped by the rising oil and gas prices.
- The three stocks face some technical hurdles.
The FTSE 100 index has outperformed its American counterparts like the S&P 500 and Nasdaq 100. It has risen by 1.26% year-to-date while US indices have fallen by more than 10%. This performance is mostly because the FTSE is often seen as a value index compared to US indices whose biggest constituents are growth companies. Here are some of the best FTSE 100 stocks for 2022.
Shell (LON: SHELL) is the best performing FTSE 100 stock for 2022. Its stock price has risen by more than 45%, helped by the surging oil and gas prices. Despite the large Russian divestments, the company has seen its revenue and profitability rise. And with oil and gas prices rebuilding their momentum, there is a possibility that Shell will continue benefiting.
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Further, the pandemic left Shell a relatively lean company that is still undervalued than most of its global peers like Chevron and ExxonMobil. Another catalyst for the stock is natural gas, whose demand is at elevated levels. Shell is one of the biggest players in the natural gas industry.
Still, the biggest concern for the Shell share price is that its stock has formed a rising wedge pattern. In price action analysis, this pattern usually leads to a major drop in due time.
BAE Systems (LON: BA) is the second best-performing stock in the FTSE 100 index. Its shares have jumped by 41.5%, helped by the rising demand for military equipment.
The ongoing crisis in Ukraine has pushed more countries to boost their defense spending. In Europe, Finland and Sweden have announced their plans to become Nato members. With Russian aggression expected, more countries like Germany and France are expected to boost their spending.
All these measures will benefit BAE Systems, the biggest defense contractor in Europe. The firm manufactures a wide variety of defense items, including planes, tanks, and ships. Still, like Shell, the BAE share price has formed a rising wedge pattern.
Glencore (LON: GLEN) is the third best-performing stock in the FTSE 100 index. Its stock has risen by over 40%, helped by the surging commodity prices.
For starters, Glencore is one of the most storeyed mining companies. It was started by Marc Rich and has grown to become one of the most important companies in the industry.
The Glencore share price has risen in 2022 because of the strong performance of top commodities like coal, copper, and nickel. Therefore, despite the recent large corruption fine, the company will likely continue doing well. Still, Glencore seems to have formed a double-top pattern, signaling that it could pull back.