Emerging Markets Strategy & Reccommendations
Highlighted themes and actionable charts:• Overweight Asia. Relative strength trends continue to favor Asia (within the EM universe). This trend, led by China, is visible in the Asia/EM ratio, which is breaking out from a two-year base pattern... see page 2
• Signs of risk-on. The consumer discretionary/staples ratio, a rough barometer of the risk-on trade, is breaking out to multi-year highs, confirming EM's advance... see page 2
• Pullback opportunity in Brazil. The Bovespa is correcting above long-term support (approx. 70,000). Take advantage of this weakness ... see page 3
• Sector strength. Tech's tenure as long-term leadership remains intact. While the sector is trading uncomfortably above support, cautioning against adding broad, new exposure, it has yet to show signs of reversing. Consumer discretionary and health care are beginning to strengthen -- add exposure... see page 4
• Bottom-up ideas. Today's report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations... see pages 5-17
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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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