Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

<p>Earlier this month a note titled <a href="https://www.smartkarma.com/insights/the-pain-and-the-gain-in-equities-and-fx" target="_blank" data-smartkarma-citation="insights:47142" rel="noopener">The Pain and the Gain in Equities and FX</a> was shared on SmartKarma trying to highlight the short term risks in these markets. In that note it was concluded that one should <em>“look out for opportunities to re-engage in equity markets anywhere between 5%-10% below current levels. Similarly expect signals to short the USD again over the weeks ahead.</em>”</p>
<p>As we now appear to be in the middle of this correction down in many equity indices, the following note attempts to highlight key support zones for major indices around the world in preparation for re-engaging in markets for a longer lasting and more underlying bull trend. </p>

Earlier this month a note titled The Pain and the Gain in Equities and FX was shared on SmartKarma trying to highlight the short term risks in these markets. In that note it was concluded that one should “look out for opportunities to re-engage in equity markets anywhere between 5%-10% below current levels. Similarly expect signals to short the USD again over the weeks ahead.”
As we now appear to be in the middle of this correction down in many equity indices, the following note attempts to highlight key support zones for major indices around the world in preparation for re-engaging in markets for a longer lasting and more underlying bull trend. 

Where to Prepare for the 'Gain' in Equities

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.</p>

Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Event-Driven

TSE Tokyo Price Index TOPIX / Event-Driven

<p>For our next webinar, we are joined by Insight Provider <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> , who will share his view on TOPIX inclusion events involving Japan-based small-caps that get approval to move to TSE1 or TSE2, and strategies in this regard.</p><h3>The webinar will be hosted on Friday, 4/December/2020, 11.00am SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=82009459753" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div><p>Janaghan Jeyakumar is an equity analyst with experience in fundamental and event-driven research in Frontier and Emerging Markets. He publishes Insights on M&amp;A Arbitrage situations in Asia-Pacific, European, and North American markets. He also covers TOPIX Inclusion Events which involve Japanese Medium/Small-cap Stocks getting promoted to TSE1 from TSE2, Jasdaq, or the Mothers Market.</p>

For our next webinar, we are joined by Insight Provider Janaghan Jeyakumar, CFA , who will share his view on TOPIX inclusion events involving Japan-based small-caps that get approval to move to TSE1 or TSE2, and strategies in this regard.The webinar will be hosted on Friday, 4/December/2020, 11.00am SGT/HKT.Register for the Webinar hereJanaghan Jeyakumar is an equity analyst with experience in fundamental and event-driven research in Frontier and Emerging Markets. He publishes Insights on M&amp;A Arbitrage situations in Asia-Pacific, European, and North American markets. He also covers TOPIX Inclusion Events which involve Japanese Medium/Small-cap Stocks getting promoted to TSE1 from TSE2, Jasdaq, or the Mothers Market.

Smartkarma Webinar | TOPIX Inclusion Trades: Strategies for Japanese Small-Caps

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/527/original/2020-11-14_11-37-16.png?1605390226" class="editor-image img-responsive" data-smartkarma-image-id="171527"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>EUPHORIC UP VOLUME</strong> - In the wake of the US election, volume reached the highest levels since March this week and the 'breakout' of the deeply-flawed <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 </a>index attracted some attention.</p><p><a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener"></a><img src="https://static-prod.smartkarma.com/images/media/000/171/528/original/2020-11-14_11-41-14.png?1605390632" class="editor-image img-responsive" data-smartkarma-image-id="171528"></p><section class="figure"><figure class="editor-figure mceNonEditable"></figure></section><p><strong>LOWER HIGHS</strong> - <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Topix</a> has a few more false summits to overcome to return to the 1980s. A failure to rise above the 2019 high would result in a technically-unhelpful third 'lower high'. Meanwhile, the Yen continues to drift higher against the US dollar. A breach of the ¥100 level would not be supportive of further market upside.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/534/original/2020-11-15_07-35-54.png?1605393369" class="editor-image img-responsive" data-smartkarma-image-id="171534"></figure></section><p><strong>RSI &gt;80</strong> - The 5-day Relative Strenght Index also rallied to above 80 for only the third time this year, and suggests a period of consolidation is ahead.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/538/original/2020-11-15_07-45-36.png?1605394410" class="editor-image img-responsive" data-smartkarma-image-id="171538"></figure></section><p><strong>DISCONNECTED</strong> - Unusally, the RSI peak was not matched by a corresponding peak in the Toraku advance/decline ratio. This rally is narrowly concentrated and vulnerable to correction without a broader base of support. Absolute breadth has been steadily falling since the beginning of September and is a bearish signal for the market overall.</p><p><img src="https://static-prod.smartkarma.com/images/media/000/171/539/original/2020-11-14_11-30-48.png?1605394669" class="editor-image img-responsive" data-smartkarma-image-id="171539"></p><section class="figure"><figure class="editor-figure mceNonEditable"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/540/original/2020-11-14_09-56-01.png?1605395057" class="editor-image img-responsive" data-smartkarma-image-id="171540"></figure></section><p><strong>TOPIX SMALL LAGS AGAIN</strong> - Lastly, the spread between TOPIX and TOPIX Small has fallen to close to a six-month low suggesting an over-concentration in index 'heavyweights'.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/541/original/2020-11-15_08-10-28.png?1605395444" class="editor-image img-responsive" data-smartkarma-image-id="171541"></figure></section><p><strong>NOT CHEAP</strong> - With only <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit (6098 JP)</a> left to report among large caps, the mostly-interim results 'season' has concluded. Trailing operating income has reached a six-year low of ¥40 trillion and a further 10% decline is projected over the next four months. More optimistically, forecast Net Income is within ¥0.5 trillion of the trailing total and has risen by ¥1.8 trillion over the last week. Trailing and forecast multiples are just above 30 times and discount a return to a pre-COVID economy by the summer. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/582/original/2020-11-15_12-53-24.png?1605412418" class="editor-image img-responsive" data-smartkarma-image-id="171582"></figure></section><p><strong>TURNING THE TIDE</strong> - As in the past, the Cabinet Office Leading Indicator bottomed out in sync (allowing for the reporting lag) with the bottoming out of trailing and forecast earnings momentum for our cap-weighted universe of listed companies. A forthcoming Insight will review the Sector, Peer Group and company highlights of the lastest results and revisions.</p><hr><div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Our best and worst pairing from Friday's announcements is IT security specialist <a href="https://www.smartkarma.com/entities/change-inc" target="_blank" data-smartkarma-citation="entities:27414:1" rel="noopener">Change (3962 JP)</a> and <a href="https://www.smartkarma.com/entities/olympus-corp" target="_blank" data-smartkarma-citation="entities:356:1" rel="noopener">Olympus (7733 JP)</a>.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/583/original/2020-11-15_13-06-16.png?1605413211" class="editor-image img-responsive" data-smartkarma-image-id="171583"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/584/original/2020-11-15_13-07-40.png?1605413274" class="editor-image img-responsive" data-smartkarma-image-id="171584"></figure></section><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
<hr>
</div>
<div><p style="text-align: center;"><strong>540 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 42% Positive / 12% Neutral / 46% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -0.3 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -7.7% Quarter YoY / -5.3% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -2.4ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 25%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>216 Annual • 29 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 46% Positive / 14% Neutral / 40% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 31% Positive / 17% Neutral / 52% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> +0.1 points</p></li>
</ul></div>
</div>

Source for all charts &amp; tables: Japan AnalyticsEUPHORIC UP VOLUME - In the wake of the US election, volume reached the highest levels since March this week and the 'breakout' of the deeply-flawed Nikkei 225 index attracted some attention.LOWER HIGHS - Topix has a few more false summits to overcome to return to the 1980s. A failure to rise above the 2019 high would result in a technically-unhelpful third 'lower high'. Meanwhile, the Yen continues to drift higher against the US dollar. A breach of the ¥100 level would not be supportive of further market upside.RSI &gt;80 - The 5-day Relative Strenght Index also rallied to above 80 for only the third time this year, and suggests a period of consolidation is ahead.DISCONNECTED - Unusally, the RSI peak was not matched by a corresponding peak in the Toraku advance/decline ratio. This rally is narrowly concentrated and vulnerable to correction without a broader base of support. Absolute breadth has been steadily falling since the beginning of September and is a bearish signal for the market overall.TOPIX SMALL LAGS AGAIN - Lastly, the spread between TOPIX and TOPIX Small has fallen to close to a six-month low suggesting an over-concentration in index 'heavyweights'.NOT CHEAP - With only Recruit (6098 JP) left to report among large caps, the mostly-interim results 'season' has concluded. Trailing operating income has reached a six-year low of ¥40 trillion and a further 10% decline is projected over the next four months. More optimistically, forecast Net Income is within ¥0.5 trillion of the trailing total and has risen by ¥1.8 trillion over the last week. Trailing and forecast multiples are just above 30 times and discount a return to a pre-COVID economy by the summer. TURNING THE TIDE - As in the past, the Cabinet Office Leading Indicator bottomed out in sync (allowing for the reporting lag) with the bottoming out of trailing and forecast earnings momentum for our cap-weighted universe of listed companies. A forthcoming Insight will review the Sector, Peer Group and company highlights of the lastest results and revisions.• BEST &amp; WORST •
Our best and worst pairing from Friday's announcements is IT security specialist Change (3962 JP) and Olympus (7733 JP).


DAILY STATS


540 Quarterly Results

Results Score: 42% Positive / 12% Neutral / 46% Negative
Average Results Score Change: -0.3 points
Average % Change in Revenue: -7.7% Quarter YoY / -5.3% Rolling TTM YoY 
Average Operating Profit Margin Change: -2.4ppt
Percentage Making Quarterly Losses: 25%


216 Annual • 29 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 46% Positive / 14% Neutral / 40% Negative
Interim Forecast/Revision Score Change: 31% Positive / 17% Neutral / 52% Negative
Average Forecast/Revision Score Change: +0.1 points



🇯🇵 JAPAN • Market Update & Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​13 - Euphoria!

MSCI Emerging Markets Index / Technical Analysis

<p style="text-align: justify;">Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1-year highs -- a positive risk-on signal. Stocks doing business in <strong>China, India, Taiwan</strong>, and <strong>South Korea </strong>continue to be a major focus when it comes to individual stock recommendations.</p>

Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1-year highs -- a positive risk-on signal. Stocks doing business in China, India, Taiwan, and South Korea continue to be a major focus when it comes to individual stock recommendations.

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Where to Prepare for the 'Gain' in Equities

As we correct down in many equity indices, this note attempts to identify levels where markets are likely to be supported

Shyam Devani

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying...

Vermilion Research

Smartkarma Webinar | TOPIX Inclusion Trades: Strategies for Japanese Small-Caps

On 4 December, 11am SGT/HKT, join us for a webinar with Janaghan Jeyakumar, who will share his view on TOPIX inclusion events involving Japan-based...

Smartkarma Research

🇯🇵 JAPAN • Market Update & Results & Revisions 11/13 - Euphoria!

EUPHORIC UP VOLUME - In the wake of the US election, volume reached the highest levels since March this week and the 'breakout' of the deeply...

Campbell Gunn

Emerging Markets Breaking Out

Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1...

Vermilion Research

Where to Prepare for the 'Gain' in Equities

As we correct down in many equity indices, this note attempts to identify levels where markets are likely to be supported

Shyam Devani

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying...

Vermilion Research

Smartkarma Webinar | TOPIX Inclusion Trades: Strategies for Japanese Small-Caps

On 4 December, 11am SGT/HKT, join us for a webinar with Janaghan Jeyakumar, who will share his view on TOPIX inclusion events involving Japan-based...

Smartkarma Research

🇯🇵 JAPAN • Market Update & Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​13 - Euphoria!

EUPHORIC UP VOLUME - In the wake of the US election, volume reached the highest levels since March this week and the 'breakout' of the deeply...

Campbell Gunn

Emerging Markets Breaking Out

Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1...

Vermilion Research

🇯🇵 JAPAN • Market Update & Results & Revisions 11/13 - Euphoria!