Vermilion Int'l Compass: Global Equity Strategy
Buys in Japan and Europe; China Pulling BackWe remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass), with Int'l Compass reports all echoing this sentiment. We will maintain our bullish intermediate-term view as long as market dynamics remain healthy and the SPX and ACWI-US are above 6028-6059 and $119-$121. Our bullish near-term outlook will remain in place as long as the 4-month uptrend continues on ACWI-US; this uptrend was just tested on Tuesday this week. Short-term supports to watch on ACWI-US continue to be $131.50-$132, the 4-month uptrend (currently also $132), $130, $128, $125-$126, and $123-$123.50.
Remain Overweight China, Korea, U.S., and Greece. Our four country overweights include China (Shanghai Composite), Korea (KOSPI), the U.S. (S&P 500), and Greece (ATHEX Composite). China (Shanghai Composite) has been a major focus ever since our July 3 Int'l Compass titled "China and Japan Breaking Out," and it is finally pulling back toward 10-year base support at 3675-3725; buy the pullback. Japan's TOPIX and TOPIX Small indexes remain bullish, but RS remains below multi-month resistances; we would upgrade Japan to overweight on RS breakouts. Europe's EURO STOXX 50 also displays what could very well be the last pullback before a breakout above 5500, and we are buyers of both Japan and Europe right here... see chart below and page 2.
Emerging Markets Overview. A 3.5-month uptrend remains in place on MSCI Emerging Markets (EEM-US), and the uptrend was tested on Tuesday this week. We continue to expect support to show up at the uptrend, but as long as it remains above $46 base support we will maintain our bullish outlook on EM. $48 is another important support level. China, Korea, Greece, and Taiwan (primarily the Technology Sector in Taiwan) remain our favorite EM countries to be buying.
Actionable Themes: Energy, Health Care, and Materials. We highlight attractive names within these Sectors. China/Hong Kong remains well-represented, but many names are extended and we are buyers on pullbacks. Most of the timelier buys are in Japan and Europe, and many are highlighted in this report... see pages 3-23.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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