Vermilion Macro Vision: Sector Synopsis
STRATEGYOur near-term outlook remains neutral and we continue to believe the market is going through a corrective phase which we view as healthy considering how overheated mega-cap growth stocks had become. As we highlighted in our 9/1/20 Compass, the Nasdaq 100 was over 30% above its 200-day MA – a rare occurrence that has not happened since 2000. Additionally in that report, we stated a 6-12% pullback would not be surprising. Thus far, the Nasdaq 100 has had a peak to trough decline of 14% -- slightly larger than we suggested but still unsurprising considering its extended position. So the big question is whether the pullback in the broad market is closer to its end than its beginning, or is this the beginning of a much larger correction? While we certainly cannot rule out a much larger correction – particularly if indicators deteriorate further – signs currently point to this pullback being fairly contained. Below we outline the reasoning behind our neutral outlook.
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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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