Vermilion Compass: Weekly Equity Strategy
THEMES:• Bullish Big Picture. The weight of the evidence still favors a bullish outlook. For instance, cyclical sectors continue to lead, as demonstrated by our Manufacturing Sector's recent breakout to new price and relative highs. Defense is lagging, as exhibited by 12-month relative strength lows in Health Care, Staples, and Utilities. And,
from a bottom-up perspective, attractive charts are even interwoven among lagging sectors, like Consumer Discretionary, where housing stocks are bullishly inflecting (SHW, MHK), hotel and resort stocks are breaking out (MAR, WYN, CHH, VAC), and cruises are plotting towards new CCL, RCL). Our bullish outlook remains intact.
• Sector & Group Commentary Consumer Discretionary) continue to lead. Stay overweight Energy, Financials, Materials, Manufacturing, Tech, and Transports. Underweight
defense... see page 2-6
• Theme of the Week: Gold & Silver Miners. Precious metals miners present an attractive opportunity. The popular ETFs, GDX and GDXJ, crossed above their 200-day moving averages yesterday, and many individual names exhibit bottom patterns. Also, we are watching the U.S. Dollar Index as a potential propellant for this theme. As seen below, it is testing support near 100. A multi-week close below this level would
mark a failed breakout, and a boon for gold. Something to watch... see pages 7-25
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Agnico-Eagle Mines is a gold mining company with mining operations in Canada, Mexico and Finland. Co. earns a proportion of its revenues from the production and sale of gold in both dore bar and concentrate form. The remainder of revenue and cash flow is generated by the production and sale of byproduct metals. The revenue from byproduct metals is mainly generated by production at the LaRonde mine in Canada (silver, zinc, copper and lead) and the Pinos Altos mine in Mexico (silver).
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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