Report
Shelley Moen
EUR 231.76 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

THEMES:

Rely on Relative Strength. In our current market environment, one which we characterize as having an embarrassment of technical riches, relative strength is more important than ever. It's because so many bullish patterns exist that we need confirming relative strength to filter for the best ideas. For example, stocks like MMM, ORCL, and PG are breaking out from base patterns, yet their relative strength trends are nowhere near such a milestone. As tempting as these breakouts are, they will still likely underperform. Accordingly, stick with Sectors, Groups, and stocks whose price and relative trends are trading in lockstep, especially within Energy, Financials, Materials, Manufacturing, Tech, and Transports (our overweight recommendations).

Pullbacks in Energy. Energy, following a multi-month correction, depicts a pullback opportunity at support. Buy... see below

A step in the right direction for retail. Retail continues to lag--relative strength highs are allusive. We do not recommend an overweight. But, that said, bottom-up price improvements are visible, as exhibited by the SPDR Retail ETF's (XRT) rebound off trendline support. Auto dealers like GPI, KMX, & SAH are helping drive this rebound. Bottom line: this is a positive sign for market breath. ... see page 2

Chemicals are leading. Our Chemical Groups are breaking out from relative strength bases patterns, indicating renewed leadership. The second half of today's report is devoted to attractive opportunities within this theme, such as ASH, EMN, and LYB... see pages 7-16


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Underlying
Ashland Global Holdings Inc.

Ashland Global Holdings is a holding company. Through its subsidiaries, the company is engaged in providing chemical solutions to customers in a range of consumer and industrial markets. The company's reportable segments are: Specialty Ingredients, which is a provider in cellulose ethers, vinyl pyrrolidones and biofunctionals and uses natural, synthetic and semisynthetic polymers derived from cellulose ethers, vinyl pyrrolidones, acrylic polymers, polyester and polyurethane-based adhesives, and plant and seed extract; and Intermediates and Solvents, which is a producer of 1,4 butanediol and related derivatives, including n-methylpyrrolidone.

Provider
Vermilion Research
Vermilion Research

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.

Analysts
Shelley Moen

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