Vermilion Int'l Compass: Global Equity Strategy
MSCI EM Index Testing 1+ Year ResistanceMSCI EM (EEM-US) continues to show signs of bottoming as it has held above our $37-$37.50 line-in-the-sand. Major 1+ year resistance on the EEM-US is at $42, and a breakout would mean the bottom is in (and would be a buy signal). We have been shifting away from developed international (MSCI EAFE) in favor of emerging markets in recent months; we downgraded MSCI EAFE to market weight in our June 13, 2023 Int'l Macro Vision, and we upgraded MSCI EM to market weight June 20, 2023 ETF Pathfinder. This is where we sit today, but we give a slight edge to EM over EAFE due to the 2.5-year downtrend reversal in the EAFE vs. EM ratio... see chart below.
Below we highlight attractive and actionable themes within EM.
EM Countries. Top country overweights continue to be Taiwan (TAIEX), India (S&P BSE SENSEX), and Greece (ATHEX Comp.). With that said, there is a plethora of smaller countries that are bullish, including Hungary, Vietnam, Argentina, Peru, Chile, Poland, Turkey, UAE, and Pakistan (among others). We are also starting to see improvement within China (Shanghai Comp., Hang Seng)... see pages 2-3.
EM Sectors. MSCI EM Technology and Energy continue to be worthy of an overweight. Meanwhile, MSCI EM Consumer Discretionary and Financials have a significant number of attractive and actionable names -- add exposure... see page 4.
On page 5 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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