Vermilion Compass: Weekly Equity Strategy
THEMES:•Bullish big picture. The market continues to trade on a bullish trajectory. And despite extended near-term trends, at least in the indices, the longer-term outlook remains favorable. The technical highlight reel includes: (1) the NASDAQ 100's breakout to new highs; (2) cyclical sector leadership; (3) good breadth--no advance-decline line divergences; (3) bullish inflections in a growing number of consumer-related Groups like autos, homebuilders, and casinos & gaming; (4) pullbacks in metals-related Groups like steel; and (5) widespread breakouts overseas, especially in emerging markets over the past several weeks.
•Cyclicals continue to lead: Cyclical Sectors continue to congregate near the top of our rankings. Tech and Transports are currently tied as our top-two Sectors. Exceptions, of course, exist: Consumer Discretionary and Energy are shedding relative strength. Both require a more selective approach, focusing on leading Groups like Casinos & Gaming, Tires & Rubber, and emerging market-related energy Groups (esp. Asia and Latin America).
•Actionable Groups in every Sector: The remainder of this week's report is devoted to actionable ideas in every Sector. We highlight a leading Group in each, and provide one or two actionable stocks.
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AK Steel Holding is a producer of flat-rolled carbon, stainless and electrical steels products primarily for the automotive, infrastructure and manufacturing, and distributors and converters markets through its wholly-owned subsidiary, AK Steel Corporation. The company's other subsidiaries also provide customer solutions with carbon and stainless steel tubing products, solutions, tool design, hot- and cold-stamped steel components and assemblies. The company sells its carbon steel products mainly to customers in North America, and it sells its electrical and stainless steel products primarily in North America and Europe. The company also produces metallurgical coal through its AK Coal Resources, Inc. subsidiary.
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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