Vermilion Compass: Weekly Equity Strategy
Key Points:The market's breadth continues to improve. All the important sectors necessary for a sustained bull market are in sync.
Even the defensive sectors have decent patterns, but their relative strength cannot keep pace (this is a classic sign of a bull market).
The Financial Sector continues to gain momentum. The regional banks continue to discount eventual higher rates as the reflation theme gains traction. Moreover, the Investment Banks are hitting new highs, while the Asset Managers have made bottoms, confirming our bullish outlook (see Insights report emailed this morning.)
The Materials Sector is a global leader, and is a major beneficiary of the global re-inflation theme.
While the Consumer Discretionary Sector remains a mess for the most part (retailers), we are seeing more and more positive action from the restaurant stocks (see our market index/technical categories grids near the back of this report for ideas).
The aerospace/defense area is gaining traction, and is even reacting to Trump tweets: LMT, NOC, RTN, and COL.
On pages 4-11 we highlight several media Groups that are turning the corner of outperformance after a long siege of underperformance. Breadth is improving in the space.
Pages 12-28 highlight some of the more interesting Health Care stocks for those interested in increasing exposure in an embattled space. Bottom-up, Sector opportunities are increasing.
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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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