Vermilion Int'l Compass: Global Equity Strategy
MSCI ACWI Breaking To New HighsMarket dynamics remain healthy and we are continuing to see signs that suggest global equities are entering a new broad-based bull market. Led by strength from the US, the MSCI ACWI index (ACWI-US) recently broke out to new highs above the important $105.40 resistance level; this is a bullish sign for global equities. Still, we are waiting for confirmation in the form of breakouts or bullish price inflections from the other broad global indexes (ACWX-US, EFA-US, and EEM-US) in order to turn bullish.
Index Overview. The MSCI ACWI (ACWI-US) is breaking above the important $105.40 resistance level, giving us hope that the other broad global indexes will follow. Important resistance levels we are watching on the MSCI ACWI ex-US (ACWX-US), EAFE (EFA-US), and EM (EEM-US) include $58.50, $82.25, and $53.60, respectively. Until we get breakouts above these resistance levels, we continue to expect more consolidation and mixed markets... see charts below.
Market Dynamics Remain Healthy. Cyclicals are outperforming relative to defensives, with the MSCI ACWI Consumer Discretionary vs. Staples ratio in an uptrend. Additionally, RS for defensive Sectors including Utilities and Consumer Staples remains at YTD lows. These are bullish, risk-on signals for global equities, as they are consistent with historical bull markets... see page 2.
Actionable Themes: Financials, Consumer Discretionary, Industrials, Materials. Global sovereign yields have moved lower in recent weeks. We expect rates to find support near current levels and we believe the recently falling yields has created an opportunity to add to value Sectors.
Co. is engaged in the manufacture and sale of fuel injection equipment, spark plugs, auto electricals, hydraulics and pneumatic equipment, portable electric power tools, lubricating oil, and spares and components.
Daimler provides a range of transportation products, including passenger cars and commercial vehicles, and also financial services. Co. operates in five segments. Mercedes-Benz Cars sells passenger cars and off-road vehicles under the Mercedes-Benz brand and small cars under the smart brand. The Daimler Trucks distributes its trucks (Mercedes-Benz, Freightliner, FUSO, Western Star, Thomas Built Buses and BharatBenz). The vans of the Mercedes-Benz Vans segment are sold under the brand name Mercedes-Benz and Freightliner. Daimler Buses sells completely built-up buses (Mercedes-Benz and Setra). The Daimler Financial Services division supports sales of Co.'s automotive brands.
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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