Int'l Insights: Bullish Stocks
Overweight EM vs. EAFE; Dollar Weakness ContinuesThe MSCI EM index (local currency) remains bullish from a price perspective as it breaks above 2-year resistance to new all-time highs; as long as price is above base support near 65,700, we are bullish from a price perspective. Additionally, the MSCI EM vs. EAFE ratio remains in an uptrend -- remain overweight EM relative to EAFE. We continue to attribute much of EM's outperformance to the downtrend in the US dollar (DXY). As long as weakness in the DXY persists we believe EM's outperformance is likely to continue... see chart below.
Below we highlight attractive and actionable themes within EM:
· EM Countries. We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Other than China, our favorite countries with attractive technicals remain largely unchanged; Taiwan (TAIEX) and India (SENSEX) remain top overweight recommendations, while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure... see page 2.
· EM Sectors. MSCI EM Technology and Materials are our top two Sector overweights, while Consumer Discretionary has pulled back to long-term RS uptrend support. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels...
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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