Int'l Insights: Bullish Stocks
• A wave of breakouts is visible throughout the global mining industry, where stocks are responding to long-term trend reversals in base metals, including aluminum, copper, and zinc. This is one of our favorite themes, one that we have highlighted extensively over the past several months, especially in our weekly International Compass reports. But is it too late to add exposure? No. Most names, including Alcoa (AA), Freeport-McMoRan (FCX), Norsk Hydro (NHY-NO), are just beginning to break out this week.• The better-looking patterns are visible in aluminum and copper stocks, where multi-year bases are the norm.
• A host of technical tailwinds support this theme including: (1) weakness in the USD; (2) breakouts in commodity currencies, such as the Australian and Canadian dollars; and (3) leadership in emerging markets. On the last point, what's good for EM is good for the global materials sector; EM's relative strength trend (vs. EAFE) shares a positive relationship with the relative strength trend of the global materials sector (0.88 correlation coefficient for the past 10-years).
• In today's report we highlight a selection of actionable charts within this theme, sorted by market capitalization.
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Alcoa is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting, casting, and rolling), and energy generation. Through direct and indirect ownership, the company has 30 operating locations in nine countries around the world, situated primarily in Australia, Brazil, Canada, Iceland, Norway, Spain, and United States.
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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