Vermilion Compass: Weekly Equity Strategy
• Bullish big picture. Our bullish outlook, pre-dating last year's Presidential election, remains intact. While breadth is not ideal, the weight of the evidence still favors a bullish narrative, allowing, of course, for occasional backing and filling. Key actors in this bullish troupe include:1. Major indices trading above support and rising 200-day MAs.
2. Confirming patterns overseas, including the MSCI EM Index's breakout to all-time highs... see page 4
3. Tech's intact--however extended--leadership status.
4. FANG's intact absolute and relative uptrends... see page 4
5. Emerging strength in global mining stocks (AA, FCX, RIO, etc.).
6. Continued strength in casinos (WYNN), cruises (CCL), and homebuilders (DHI).
7. Improving patterns and breadth throughout biotechs (see IBB).
8. A financial sector breaking out to multi-year highs, supported by unfolding breakouts in names like GS, MS, and PNC.
9. And, more recently, signs of stabilization in the lagging retail sector, where the related ETF, XRT, depicts a near-term bottom.
• The global materials sector is strengthening -- increase exposure. Reiterating one of our favorite themes, the global materials sector continues to exhibit timely opportunities, especially in mining stocks. This theme is supported by several technical tailwinds including: (1) a breakout in the EM/Developed ratio; (2) breakouts in base metals, such as copper and zinc; and (3) breakouts in commodity currencies. In today's report we highlight actionable names in our foreign steel Group (all US-listed stocks)... see pages 2-3, 11-15
• Health Care's recent weakness = buying opportunity. The Sector has cooled off over the past month, with attractive Groups like biotechs and HMOs pulling back to support. This is a buying opportunity... see pages 8-10
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Aetna is a health care benefits company. The company conducts its operations in three business segments: Health Care, which provides medical, pharmacy benefit management services, dental, behavioral health and vision plans provided on both an insured basis and an employer-funded basis and businesses products and services that complement its medical products; Group Insurance, which primarily includes group life insurance and group disability products and long-term care products; and Large Case Pensions, which manages a variety of retirement products (including pension and annuity products) primarily for tax-qualified pension plans.
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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