Vermilion Int'l Compass: Global Equity Strategy
EURO STOXX 50, MSCI ACWI Breaking OutGlobal equities (MSCI ACWI) are resuming their uptrends following several weeks of consolidation above major base supports. This is classic bull market behavior. Considering market dynamics remain healthy, our outlook for global equities remains bullish.
Europe, MSCI ACWI Breaking Out. Europe's EURO STOXX 50 has held above critical support at 4400-4415, and now displays a bull flag breakout following over a month of consolidation -- add exposure. We continue to be bullish if the EURO STOXX 50 is above 4400. The MSCI ACWI (ACWI-US) is similarly breaking out from its 1+ month consolidation, after holding above $98-$99 base support; as long as ACWI-US remains above $98, we remain bullish... see chart below and page 2.
Bullish Market Dynamics. Additional factors other than the aforementioned breakouts continue to support our bullish outlook, including (1) relative strength is hitting multi-year lows for MSCI ACWI defensive Sectors Consumer Staples (KXI-US) and Utilities (JXI-US), (2) the U.S. dollar (DXY) remains below $106, and (3) the 10-year Treasury yield remains below 4.35%... see page 2.
Country Overweights. Our current country overweights include Japan, India, Greece, Poland, and Brazil. With that said, we have Brazil on watch for a potential downgrade.
Actionable Themes: Technology, Services, and Communications. Technology and Services continue to be top global overweights -- add exposure. The Communications Sector is also starting to outperform in Japan, while Europe's Communication Services Sector displays bottoming price action -- add exposure... see pages 3-15.
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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