Vermilion Compass: Weekly Equity Strategy
Financials are reestablishing leadership statusHeading toward a new year, our market stance remains the same: bullish. In this week's report we highlight key, actionable themes (below), and highlight actionable Groups & stocks (pages 8-20).
• Cyclicals continue to lead: No changes here -- cyclicals continue to outperform defense, as exhibited by the Consumer Discretionary/Staples ratio (see page 3).
• Lagging Sectors exhibit bullish price patterns: All defensive sectors boast bullish price patterns despite weak relative strength trends -- typical action in a bull market.
• Financials are resuming their leadership status: After a year-long consolidation, the Sector's relative strength trend is breaking out (see below), establishing a new phase of leadership. Similar breakouts are visible in banks (ETFs: KBE, KRE) and stocks such as Goldman (GS). We remain overweight.
• Energy is bottoming: Brent and WTI have decisively broken out from three-year bottom patterns. Surprisingly, with the exception of refiners, energy equities have not responded as enthusiastically to this as we'd expect. Nonetheless, bullish trend reversals are widespread, creating opportunities. We remain market weight. Watch the lagging energy service names for catch-up plays, where names like HAL are on the verge of breakouts from bottom patterns (related ETFs: OIH, XES).
• Consumer Discretionary's technicals are improving: Widespread bottom patterns throughout retail stocks (ETF: XRT) are reversing the Sector's underperformance dating back to 2015. We upgraded Consumer Discretionary last week to market weight.
• Set-ups in monthly charts: We're reminded that in times of swift, short-term sell-offs, such as the recent dip in Tech, monthly charts prevent us from rash decisions, keeping us aligned with the primary trend. They also reveal long-term patterns easily missed in daily (sometimes weekly) charts. Examples include the secular base patterns in INTC, STLD, and NUE (see page 4).
For a trial to Vermilion Research visit our website at www.vermilioncap.com or contact our sales team at (952) 922-7500.
Adtalem Global Education provides educational services. The company's institutions and companies provide an array of programs across medical and healthcare, financial services and business and law. The company's segments include: Medical and Healthcare, which includes Chamberlain University and Medical and Veterinary Schools that provide educational programs in nursing and health professions, respectively; Financial Services, which includes Becker Professional Education that provides education serving the accounting and finance professions; and Business and Law, which includes Adtalem Education of Brazil institution that focuses in business, engineering, healthcare, law, management, medical and technology.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.