Vermilion Int'l Compass: Global Equity Strategy
Remain Overweight Japan and IndiaWe remain bullish on global equities as long as the major $93 support level on MSCI ACWI (ACWI-US) continues to hold; this is 1+ year base support and a level that coincides with the 10.5-month uptrend. The 10-year Treasury yield remains below 4.3%-4.35% resistance, a constructive sign for risk assets. On the other hand, the U.S. dollar (DXY) is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance). If the 10-year Treasury yield remains below 4.35% and the DXY is below $105.70, we would continue to expect $93 support on ACWI-US to hold.
Remain Overweight Japan and India; Downgrading Taiwan and Greece. Almost all Sectors remain bullish in Japan and India -- remain overweight/add exposure; the vast majority of today's buy recommendations are from Japan and India. On the other hand, we are downgrading Taiwan (TAIEX) and Greece (ATHEX Comp.) to market weight due to price and RS deterioration... see charts below and page 2.
Still Above Key Supports. In addition to the important $93 support level on ACWI-US, 5+ month supports on other major indexes continue to hold, including 4200 on the EURO STOXX 50, $47.50-$48 on MSCI ACWI ex-U.S. (ACWX-US), $70 on MSCI EAFE (EFA-US), and $37.50-$38 on MSCI EM (EEM-US). As long as these supports continue to hold, we cannot be bearish.
Actionable Theme: Japan/India Real Estate. Global real estate (RWO-US) has been a major laggard, leading us to mostly ignore the space. However, ignoring Real Estate in Japan/India would be a mistake; we highlight several buys... see page 3 and 5-6.
Actionable Theme: Energy. We remain bullish on crude oil prices and the global Energy Sector (IXC-US). We highlight attractive names to buy/stay long... see page 3 and 6-11.
Actionable Themes: Technology/Services and Consumer Discretionary. Technology/Services Sectors are just getting going within India, and remain attractive within Japan and, to a lesser extent, Europe. We also highlight two of our favorite Consumer Discretionary stocks within the United Kingdom to buy/stay long: InterContinental Hotels (IHG-GB) and Whitbread (WTB-GB)... see page 4 and 11-17.
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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