Int'l Vital Signs: Actionable charts
Remain Overweight EM Relative To EAFEThe MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective. Additionally, MSCI EM has continued to outperform relative to the MSCI EAFE index as shown by the intact uptrend in the EM vs. EAFE ratio -- remain overweight EM relative to EAFE. The US dollar (DXY) is making lower highs, something we expect to continue. As long as the DXY downtrend is intact we believe EM's outperformance is likely to continue... see chart below.
Below we highlight attractive and actionable themes within EM:
· EM Countries. China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today's recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends -- add exposure. ... see page 2.
· EM Sectors. We recommend Sector overweights to MSCI EM Technology, Consumer Discretionary, and Materials, as all show bullish RS trends. Health Care and Communications were prior overweight recommendations but now it appears RS is in a consolidation phase... see page 3.
Outside of the above themes, a bottoms-up approach is required to uncover attractive and actionable stocks. On page 4 we include a table of all stocks highlighted in this report.
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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