Vermilion Int'l Compass: Global Equity Strategy
Key Supports Holding StrongIn last week's Int'l Compass (Aug. 18) we discussed that, if the 10-year Treasury yield and U.S. dollar (DXY) can stay below their respective resistance levels (4.3%-4.35% and $103.50-$103.70), we remain buyers on the pullback to $93 on MSCI ACWI (ACWI-US). The ACWI-US low on Aug. 18 was $93.02; as long as $93 (1+ year support) holds and the 10-year Treasury yield and DXY are below the aforementioned levels, $93 on ACWI-US is likely to low for this pullback. On the other hand, if the 10-year Treasury yield and DXY were to break above resistance, that would put $84-$85 on ACWI-US squarely in play... see charts below and page 2.
Supports Held. Last week (Aug. 18), we discussed that we expected a bounce since several major global indexes were testing 4.5-month supports, including 4200 on the EURO STOXX 50, $47.50-$48 on MSCI ACWI ex-U.S. (ACWX-US), and $70 on MSCI EAFE (EFA-US). As long as these supports continue to hold, we cannot be bearish.
Country Overweights. Our current country overweights remain unchanged, and include Japan, India, Taiwan, and Greece.
Actionable Themes: Everything Except Defensives. We are finding actionable opportunities across most Sectors, with the main exceptions being defensives (Utilities, Consumer Staples, and Real Estate). And, while we say that, there are still many attractive names within these defensive Sectors, particularly when looking at individual names that fall within our country overweights (see above). There is really no clear leader on the global scale when it comes to "growth" vs. "value" Sectors, so we are covering both. We highlight our favorite names to buy/stay long within Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials... see pages 3-16.
Note: With RS staying at the lows for defensive Sectors including global Utilities (JXI-US), Staples (KXI-US), and Real Estate (RWO-US), it is another data point that suggests this is a minor pullback, and that the ACWI-US may have already made its lows.
Nomura Research Institute is mainly engaged in the provision of consulting, financial and industrial IT services, and IT platform services. Consulting Services segment offers management consulting and system consulting services. Financial IT Solutions segment provides IT services including system development, operation outsourcing, and shared-online services for securities, insurance, banking, and other financial industries. Industrial IT Solutions segment provides IT services for distribution, manufacturing, service, and healthcare industries. IT Platform Services segment offers IT infrastructure services, managed services, and advanced information technology services.
Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.
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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