Int'l Insights: Pullback Opportunities in STOXX 200
Pullback opportunities are currently in limited supply. While most markets are advancing to 12+ month highs, including the U.S., Japan, and EM, Europe is trading at its 200-day MA, resulting from a four-month decline. This presents an attractive entry point, especially for small-cap investors.The technical case for European small caps is based on two observations: (1) the STOXX Europe 200 Small Index's chart, and (2) bottom-up observations.
On the first point, the Index (below) is bullishly inflecting at a level of congested support: the multi-year base pattern and the 200-day MA. On the second point—bottom-up observations—the number of attractive patterns still handily outweigh bearish trends. Also, cyclical industries continue to outperform, including the themes highlighted below.
In today's report we highlight a selection of our favorite small-cap charts, many of which fall under the following themes:
• Strength in steel stocks. We continue to recommend global miners and metals stocks. European small-caps are no exception, where we're finding plenty of long-term ideas, ranging from Aperan (APAM-NL) and Acerinox (ACX-ES) to Tubacex (TUB-ES) and Salzgitter (SZG-DE)... see page 2
• Large base patterns throughout trucks/construction/farm machinery. This industry is rich in long-term base breakouts, such as Bucher Industries (BUCN-CH), Wacker Neuson (WAC-DE), and Manitou (MTU-FR)... see page 3
• Auto parts are bullishly inflecting. Attractive entry points are visible in Plastic Omnium (POM-FR), Kongsberg (KOA-NO), and Grammer (GMM-DE)... see page 4
• Energy contains an uptick in actionable charts. This is especially true of Norwegian names. We like TGS-NOPEC (TGS-NO), Ocean Yield (OCY-NO), and Akastor (AKA-NO)... see page 7
For a trial to Vermilion Research, visit our website at www.vermilioncap.com or contact our sales team at (612) 315-4082.
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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