Vermilion Int'l Compass: Global Equity Strategy
Bullish Reversals Proliferate; Stick With Growth AreasOver the past two weeks we have discussed positive signals that we believe suggested the lows for this bear market may have already been established, or that downside was limited. Last week we upgraded our outlook to neutral, noting that the bullish reversals had begun, with the MSCI ACWI (ACWI-US) and STOXX Europe 50 index being the first to reverse topside their 4-month downtrends (in addition to the S&P 500). As we discuss below, bullish reversals are proliferating globally, something that continues to support our belief that global equities are bottoming.
Bullish Reversals Proliferate. In addition to the MSCI ACWI, STOXX Europe 50, and S&P 500, the following is a list of indexes that are reversing topside 3.5-9-month downtrends: Russell 2000 (IWM-US), Russell Micro Caps (IWC-US), MSCI EAFE (local currency), Europe (STOXX 50, STOXX 600), France (CAC 40), Switzerland (SMI), Netherlands (AEX), Australia (ASX All Ordinaries), Denmark (OMX Copenhagen 20), Finland (OMX Helsinki), New Zealand (NZX 50), Sweden (OMX Stockholm 30), the UK (FTSE 250 x Inv Trusts), Vietnam (Ho Chi Minh VN), Greece (ATHEX Comp), Qatar (QE), and UAE (FTSE UAE)... see charts below and page 2.
RS Deterioration for Global Mega-Cap Pharmaceuticals. Over the past two weeks we have discussed what appears to be deteriorating/topping RS for defensive MSCI ACWI Sectors such as Utilities and Consumer Staples; RS deterioration for defensive areas is a risk-on signal that needed to happen in order for the broad market to establish a reliable bottom. Now, another defensive area, mega-cap pharmaceuticals (PPH-US), displays a major RS uptrend violation, and it is taking RS on the cap-weighted global Health Care Sector (IXJ-US) down with it. Within Health Care, reduce exposure to mega-cap pharma, and shift to more cyclical/growth areas including biotechnology, medical devices/equipment, and health care services... see page 3.
Actionable Theme: Growth/Cyclical Areas Within Technology, Consumer Discretionary, and Industrials. Global growth Sectors continue to gain momentum and have emerged as leadership -- overweight growth. Sectors covered include Technology, Consumer Discretionary, and Industrials -- add exposure... see pages 4-16.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.