Vermilion Int'l Compass: Global Equity Strategy
Int'l Compass: Japan Bullishly Inflecting; Constructive Outlook Intact With Supports Holding on EURO STOXX 50, MSCI ACWI ex-U.S., and MSCI EAFE; Actionable Themes: Consumer Discretionary, Technology, SerJapan Bullishly InflectingThe MSCI ACWI index (ACWI-US) briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we would be on the lookout for a false breakdown. Indeed, on MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low. MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively.
Japan Bullishly Inflecting. Last week's recommendation (Oct. 26 Int'l Compass) to remain overweight and add exposure to Japan is already paying off; the TOPIX held at 5-month support at 2200-2215 and now displays a bullish 1.5-month downtrend reversal. This is only further evidence that now is the time to be buying Japan, and that it remains leadership. Additionally, the 1.5-year RS uptrend (vs. MSCI ACWI) remains intact... see chart below. Our only other country overweight is India.
"Next Down" Supports Holding on EURO STOXX 50, MSCI ACWI ex-U.S., and MSCI EAFE. These three indexes remain above their "next down" support levels, which we initially discussed in our Sept. 29, 2023 Int'l Compass following breakdowns below 4200 on the EURO STOXX 50, $47.50 on MSCI ACWI ex-U.S. (ACWX-US), and $69-$70 on MSCI EAFE (EFA-US). These levels are now resistance, and it would be bullish if these indexes can reclaim these levels. "Next down" supports that have held so far include 4000 on the EURO STOXX 50, $45 on ACWX-US, and $65-$66 on EFA-US. We discussed last week (Oct. 26) how it was a logical spot for a bounce -- and we are getting that bounce -- but we cannot get bullish until we see downtrend reversals and the aforementioned resistance levels reclaimed... see page 2.
Actionable Themes: Consumer Discretionary, Technology, Services, and Energy. These four Sectors continue to be home to some of our favorite long ideas. A significant portion are from Japan, which has often been the case since we upgraded Japan to overweight in late March (3/30/23 Int'l Compass)... see pages 3 and 5-13.
Actionable Theme: Consumer Staples. The global Consumer Staples Sector appears to be putting-in price and RS bottoms following significant underperformance -- add selective exposure...vices, Energy, and Consumer Staples
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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