Developed int'l markets depict bottom patterns -Europe, Japan & Canada
​Developed international markets are nearing breakouts from potential bottom patterns, signaling likely catch-up rallies to the leading U.S. market.
European, Japanese, and Canadian indices depict three-month head & shoulders bottoms, with the better-developed patterns found in the STOXX 600 and TSX Composite. Of course, it will take breakouts above their respective resistance levels (“necklinesâ€) to confirm the patterns. But given their presence, and the expanding list of risk-on signals, we believe this should set a foundation for another leg higher.
Despite these bottoms in developed markets, we still favor overweights in emerging markets, as relative trends are shifting in favor EM. The MSCI EM/EAFE ratio (next page) is inflecting higher following a 4-year decline to the 18-year uptrend. Unless this fails to produce upside follow-through, our recommendation stands.
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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