Vermilion Int'l Compass: Global Equity Strategy
Int'l Compass: Japan Among the Latest to Break Out -- Add Exposure; Actionable Themes: Growth/Cyclical Areas and Consumer StaplesJapan Among the Latest to Break Out -- Add Exposure
The theme we have seen play out over the past four weeks is an increasing number of global and country-specific market indexes reversing 4-10-month downtrends and/or making bullish inflections topside important resistance levels, and there has yet to be any failed breakouts. We continue to believe that global equities are going through a bottoming process, but the real test will come during the eventual pullback, when we learn whether these breakout levels and important moving averages (e.g., 50-day MAs) will hold.
Japan Among the Latest to Break Out. The already significant list of global and country-specific market indexes with major bullish reversals/inflections continues to expand. The latest to reverse topside 4-10-month downtrends or break above key resistance levels includes: Japan (Nikkei 225, TOPIX, TOPIX Small), Canada (S&P TSX), and India (SENSEX). Japan's Nikkei 225, TOPIX, and TOPIX Small all display base breakouts after consolidating sideways for eight months. This is a major buy signal as Japan continues to be considerably further along in the bottoming process relative to virtually all other countries; we are bullish as long as the 2-month uptrends continue. We highlight a significant number of Japanese stocks in todays report... see charts below and page 2.
STOXX Europe 600 Travel & Leisure With Major Bullish Reversal. The macro picture in Europe remains about as bad as can be, yet one of the most cyclical Sectors in Europe, the STOXX 600 Travel & Leisure index, displays a bullish 10-month downtrend reversal. Technicals historically lead fundamentals at major turning points, and this could very well be one of those instances... see page 4.
Actionable Theme: Growth/Cyclical Areas. Global growth and cyclical Sectors continue to display leadership qualities -- add exposure. Sectors covered include Industrials/Transportation, Technology, Consumer Discretionary, and Financials... see pages 3-14.
Actionable Theme: Consumer Staples. Japanese Consumer Staples stocks are the focus of this section (specialty foods and household/personal care), though we highlight a few additional names out of the Netherlands, Hong Kong, Poland, and India -- add exposure... see pages 4 and 14-16.
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.
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