Vermilion Compass: Weekly Equity Strategy
Bullish Outlook Intact; Mining For GoldAs highlighted in last week's U.S. Macro Vision, our outlook is now bullish as we saw the breakouts we needed in the Russell 2000 (IWM) and Industrials (XLI). Considering these breakouts along with ongoing healthy market dynamics, we continue to believe we have officially entered a new broad-based bull market.
Materials Breaking Out To New Highs, Joins Other Cyclicals. Materials (XLB) is the latest Sector to break out to new 2021 highs, providing more evidence of a new broad-based bull market. Other areas that we have highlighted over the past 1-2 months that are trading at YTD highs include: Energy (XOP), Financials/banks (XLF, KRE), mid-caps (IJH), equal-weighted Discretionary (RCD), PHLX Semiconductors (SOXX), equal-weighted Transportation Sector (XTN), Russell 2000 (IWM), Industrials (XLI), and retail (XRT). We are bullish as long as these areas remain above their 1H2021 highs.
S&P 500. The S&P 500 remains bullish as it hit our 4700 target (blue dashed uptrend). Resistance remains at this blue uptrend, currently 4735. As long as the S&P 500 remains above supports at 4545 and the 50-day MA (4463), we expect to see 4735. If there is a breakout above 4735 (the blue uptrend) we expect to see 4980-5000 next (the red dashed uptrend)... see chart below.
Key Levels. As long as the following support levels hold, we are bullish on the broad market and we see pullbacks as buying opportunities. Key support levels we are watching include $230-234.50 on the Russell 2000 (IWM), 4545 on the S&P 500, $76 on WTI crude oil, 1.40%-1.45% on the 10-year Treasury yield, and 1.76% on the 30-year Treasury yield.
Gold & Gold Miners. Gold is reversing topside its 15-month downtrend, also breaking above the 1830 resistance level; we are bullish as long as gold is above 1830. Gold miners (GDX) are attractive bottom-fishing candidates as price and RS show signs of bottoming -- add exposure. We are bullish as long as the GDX is above $31... see page 3.
In today's report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-50 Internet Retailers, MA-27 Gold, Western Hemisphere, Small-Cap, and MA-29 Gold, South Africa... see pages 10-20.
Amazon.com serves consumers through its online and physical stores. The company also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and the company develops and produces media content. The company operates customer service centers and provides programs that enable sellers to grow their businesses, sell their products in its stores, and fulfill orders through the company The company serves developers and enterprises of various sizes, including start-ups, government agencies, and academic institutions, through its Amazon Web Services segment, which provides a set of global compute, storage, database, and other service offerings. The company also provides services, such as advertising.
Eldorado Gold is engaged in the exploration, development, mining and production of gold and other mining resources in Brazil, China, Turkey and Greece.
IAMGold is engaged in the exploration for, development and operation of gold mining properties, and the operation of a niobium mine.
Netflix is engaged in subscription streaming entertainment service including TV series, documentaries and feature films across a variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, without commercials. Additionally, several members in the United States subscribe to the company's DVD-by-mail service. The company improves its streaming content with a focus on a programming mix of content. The company's members can download a selection of titles for offline viewing. The company operates its business as a global operating segment.
New Gold is a gold producer engaged in gold mining and related activities including acquisition, exploration, extraction, processing and reclamation.
Northfield Capital is a publicly traded investment holding company. Co. is engaged in investing primarily in the resource sectors including gold, platinum, and other precious metals, nickel, copper and other base metals, and oil and natural gas.
Pretium Resources is engaged in the acquisition, exploration and development of precious metal resource properties in Northwest British Columbia, Canada. Co. is in the process of exploring its Snowfield and Brucejack Projects and has not yet determined whether it contains economically recoverable mineral reserves.
Seabridge Gold is a development stage company engaged in the acquisition and exploration of gold properties located in North America.
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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