Vermilion Compass: Weekly Equity Strategy
Key Points:We remain constructive on the overall market, but wouldn't be surprised if we go through a period of consolidation/backing-and-filling.
• Our overweight recommendations are: Energy, Materials, Manufacturing, Transportation, Technology, and Financial Sectors.
• We recommend underweights in: Utilities, Consumer Staples, Communications, and Health Care Sectors.
• Market weightings recommended in Consumer Discretionary and Services Sectors.
• Our indicators remain bullish but will have a tough time improving from these levels - see page 3.
• Moreover, the 10-year bond yield has rallied to resistance, while bonds are extremely oversold.
• The REITs Groups have been underperforming given the rapid rise in interest rates since the election. However, the Hotel REITs are actually improving due to the strong action in the underlying industry. Many sport very attractive yields and price patterns.
• Leadership has been clearly defined in the current market upswing. We point this out on page 2 and comment on the leaders and laggards as defined by our RSR Best and Worst Groups Portfolio. Leadership, once defined, tends to persist, but we wouldn't chase at this point. There are attractive base patterns underneath most of the component stocks, which will provide potential support on welcome pullbacks.
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Apple Hospitality REIT is a real estate investment trust that invests in real estate, primarily in the lodging sector, in the U.S. The company owns hotels located in urban, suburban and developing markets throughout several states. All of the company's hotels operate under Marriott, Hilton or Hyatt brands. The hotels are operated and managed under separate management agreements with hotel management companies, none of which are affiliated with the company
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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