Vermilion Int'l Compass: Global Equity Strategy
Add To Growth On This PullbackMarket dynamics have mildly deteriorated in recent weeks on concerns over less accommodative monetary policy and the Omicron variant. Despite recent deterioration, critical supports are holding on the broad global indexes, and our global outlook remains neutral as we continue to expect more consolidation and mixed markets.
Index Overview. Key support levels that we have been focusing on for months continue to hold. Important support levels we are watching include $54 on MSCI ACWI ex-US (ACWX-US), $76.50-$77 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US). If supports hold we are constructive and we expect more consolidation and mixed markets ahead. However, if supports start to break we would turn bearish as we would expect a more significant correction... see page 2.
Small-Caps No Longer Outperforming. The non-US small-cap vs. large-cap ratio (MSCI ACWI ex-US Small-Caps vs. Large-Caps) is violating its 19-month uptrend; this is a clear risk-off signal for global equities -- focus on large-caps... see page 3.
Commodities Deteriorate. The Bloomberg Commodity index (DJP-US) displays an uptrend violation and WTI crude oil broke below major long-term support at $76-77. As a result, we no longer see commodities as a tailwind for global equities, but rather as a neutral indicator. Major supports to watch include $25.75 on DJP-US and $62 on WTI crude... see page 3.
Actionable Themes: Services, Technology, & Consumer Discretionary. Growth continues to outperform relative to value, shown by the intact uptrend on the MSCI ACWI ex-US Growth vs. Value ratio. We highlight several stocks within the predominantly growth-oriented Services, Technology, and Consumer Discretionary Sectors -
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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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