Int'l Macro Vision: Global Equity Strategy
Investors have endured turbulent year-to-date price action as volatility has been re-introduced to global markets. Owing to various concerns ranging from rising interest rates to an all-out trade war, most major indexes are testing critical support levels. In addition, market internals have begun to paint a mixed picture. Given the current state of the market, what do technicals suggest is next for global equities?In the short-term we believe the most likely scenario is a continuation of the recent consolidation and heightened volatility across global markets.
While support levels have held across most markets, breadth indicators are sending mixed signals. Of primary concern is a long-term breadth indicator, % of stocks above their 200-day moving average, which recently moved to a new low on the MSCI ACWI. This occurred as price did not hit a new low, which translates to a negative divergence. What we want to see, and what has typically occurred at market bottoms, is a positive divergence – when the price index hits a new low or holds horizontal support as the % of stocks above their 200-day moving average makes a higher low. With that said, other breadth indicators such as % of stocks above their 50-day moving average, advance-decline lines, and the Global Consumer Discretionary to Staples ratio are still showing neutral or positive signals.
In our April International Strategy, we explore these and the following themes in further detail:
• Defensive Sectors are perking up, including an actionable Group within Health Care: Pharmaceuticals.
• Overweight Japan and Hong Kong.
• Overweight Emerging Markets.
Astellas Pharma is engaged in the development, research, manufacture, and sale of pharmaceuticals. Co. operates its operation in Japan, Americas, Europe, and Asia/Oceania. Co.'s principal product for the global market include "Xtandi" a therapeutic agent for prostatic cancer, "Eligard" a luteinizing hormone-releasing hormone (LHRH) agonist for the treatment of prostate cancer,"Prograf" an immunosuppressant used to prevent rejection in organ transplants, "Vesicare" a treatment for overactive bladder, "Harnal ( "Omnic" in the U.S. and Europe)" an 1 blocking agent for prostatic and urethral smooth muscle, and "Fungurad ("Mycamine" in the U.S. and Europe)" a candin-type antifungal agent.
Chugai Pharmaceutical is a pharmaceutical company. Along with its subsidiaries, Co. is engaged in the research and development of new prescription medicines and the subsequent manufacturing, marketing and distribution activities. Co. sells its pharmaceutical products to the nationwide appointed stores in Japan, as well as in overseas, such as Germany, the U.K., France, Taiwan, China, South Korea and the U.S. Co., through its subsidiaries, is also involved in the management of research facilities, and the research on drug discovery, as well as the provision of literature research services for pharmaceutical information, and pharmaceutical academic information.
Tsh biopham corporation ltd. is a Taiwan-based company principally engaged in the manufacturing and distribution of medical preparations. The Company primarily provides medicines for cardiovascular, including Amtrel, Rytmonorm, Licodin, Isormol and ISOPTIN SR; medicines for intestines and stomach, including MOPRIDE, Catilon, Gastro-Timelet and Ribarin, and medicines for central nervous, including Aleviatin, Lonine and Lacoxa SR. The Company distributes its products mainly in domestic markets.
Zeria Pharmaceutical and its subsidiaries are mainly engaged in the manufacture, sale, import, and export of prescription drugs and health care products. Ethical Pharmaceuticals segment manufactures, purchases and sells ethical pharmaceuticals including "Acofide®" therapeutic agent for functional dyspepsia, "Asacol®" therapeutic agent for ulcerative colitis, "Promac®" zinc-containing anti-ulcer agent, and other. Consumer Healthcare segment manufactures, purchases and sells OTC drugs, as well as manufactures and sells cosmetics. Co. is also engaged in the insurance agency and real estate services, the purchase and sale of sales promotional materials, and the maintenance business.
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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