Vermilion Int'l Compass: Global Equity Strategy
Global equities in recovery modeGlobal equities have recovered and are on the rise following a bout of downside volatility that may seem foreign to some market participants, after we have grown accustomed to the relative calm that was 2017.
Optimistically, and with the recent correction now behind us, we see recent activity as correcting prices that may have gone “too far, too fast,†allowing for new investment opportunities to arise. The MSCI ACWI has established a short-term low at the 200-day moving average, which is an important level that we want to see hold. Indeed, that is our expectation.
In today's report we review every global sector, highlighting actionable stocks within each.
Consumer Discretionary. Overweight. The sector's relative strength trend is showing no signs of letting up. We highlight various consumer electronics manufacturers which offer opportunistic entry points... see page 4
Consumer Staples. Underweight. Relative strength still reflects clear underperformance, even despite recent downside volatility for equity markets... see page 5
Energy. Market Weight (downgrade). With WTI crude showing outsized losses and multiple support levels being violated, we are downgrading the sector... see page 6
Financials. Overweight. With interest rates on the rise, the financial sector continues to perform well. Chinese banks are particularly attractive... see page 7-8
Health Care. Underweight. Lagging from a sector-level perspective (blame large-cap U.S. names), small- and mid-cap names are an area to focus on... see page 9
Industrials. Market Weight. The sector is stuck in a sideways relative strength trend, though Aerospace-related stocks offer a bright spot... see page 10
Materials. Overweight. A weak dollar & strength in commodity prices support our outlook. We highlight diversified chemicals stocks that work... see page 11
Technology. Overweight. Tech's long-term leadership status remains intact, and recent declines appear to be providing some ideal entry points... see page 12
Utilities. Underweight. Rising rates continue to suppress the sector... see page 13
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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