Vermilion Int'l Compass: Global Equity Strategy
Bullish Outlook IntactDuring the latest pullback, we discussed in mid-April the possibility that further downside was limited on MSCI ACWI (ACWI-US) and the EURO STOXX 50. More recently, in our 5/2/24 Int'l Compass, we discussed how it was "quite possible" that the lows for the pullback had already been established. Since then, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. We continue to view the latest pullback as healthy and normal within the ongoing bull market. As a result, our bullish outlook (since early-November 2023) remains intact, and we expect higher prices ahead.
MSCI Emerging Markets, China/Hong Kong With Major Bottoms. To reiterate, we upgraded MSCI EM to market weight in our 5/2/24 Int'l Compass with MSCI EM (local currency) making a bullish 3+ year RS reversal and price holding above 2+ year base support. We continue to recommend adding exposure to emerging markets -- and have been since our April 25, 2024 Int'l Compass; this trend is likely just getting going. China (MSCI China, Shanghai Composite) and Hong Kong (Hang Seng) are starting to lead the way, and we continue to recommend adding exposure to them... see page 2.
Country/Region Overweights. Current country/region overweights remain unchanged, and include Japan, Taiwan, Europe, and Poland.
Commodities. Local tops remain in place on key commodities, including WTI crude oil and gasoline (UGA-US). We continue to view this as a positive sign as it means inflation is not likely to be a concern. Additionally, the Bloomberg Commodity index (DJP-US) remains below major $33.20 resistance. We also remain cautious on the global Energy Sector (IXC-US) which displays a massive false breakout; and we are reiterating our 5/2/24 call to sell/take profits (5/2/24 Int'l Compass).
U.S. Dollar (DXY). The DXY remains below its October 2023 highs of $107.40, and is now clearly rolling over after falling back below the important $105.70-$106 level as discussed in our 5/2/24 Int'l Compass. This remains a risk-on signal for global equities.
Actionable Themes: Communications, Technology, Consumer Discretionary, and Materials. In today's report we highlight our favorite ideas across several Sectors, including many large-cap buys within emerging markets... see pages 3-15.
Catcher Technology is engaged in the manufacture, processing and sale of aluminum, magnesium alloy compression casting and moulds; and lease of land and factory buildings. Co. provides one-stop shopping services to its clients. Co. also provides customers different options on forming process and surface treatment, e.g. extrusion, stamping, forging, and injection mold for different materials. In addition, Co. is engaged in general investments; trading businesses; and manufacture and sale of moulds and electronic components. Co.'s major products include laptop as well as consumer electronic products and parts. Co. operates principally in Taiwan and the People's Republic of China.
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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