Author: Kenley Scott

Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.

Japan Market Update

Posted on July 2, 2018February 1, 2019 by Kenley Scott

Key Points:

The Nikkei was shifted back to a Downtrend after a 2.2% drop today and breach of the 40-WMA. Next support for the Nikkei is about 3.5% lower around 21,000.

Looking for a quick retake of the 200-DMA over the next few days. Should today mark the lows for the index, we will begin looking for a follow-through day (+1.7% move on higher volume than prior day) as the potential start of a new uptrend.

Defensive sectors (Health Care, Retail, Staple, and Utility) were outperforming, but did not hold up today.

Looking for Focus List relative outperformers, Recruit Holdings (RHCL.JP; 6098:JP), GMO Payment Gateway (GMOP.JP; 3769:JP), and Tosho (T@SH.JP; 8920:JP) are best.

Outside of the Focus List, we included 21 stocks (> $500M market cap), with minimum moderate growth (5% sales, 7% EPS) and improving RS Ratings over four weeks, in our report.

Highlights are Murata Manufacturing (SM@N.JP; 6981:JP), TDK (TD@N.JP; 6762:JP), and Kobe Bussan (KBUS.JP; 3038:JP).

Global Sector Commentary

Posted on June 29, 2018June 29, 2018 by Kenley Scott

Key points from this week’s commentary:

The first half 2018 ends with a 4% loss for the developed markets index (

), an 8% loss for the emerging markets index (

), and a 13% loss for the frontier markets index.

The first half 2018 also ends with about 60% of markets we track in a Downtrend (or Rally Attempt).

Favored areas:

U.S. Retail, HC, and Energy, with a close eye on potential continuation of late-June rotation to defense. Buyable names from these areas include At Home (

), Supernus Pharma (

), Diamondback Energy (

), and Mccormick (

Other developed: Clean energy in HK (Enn Energy, XINA.HK; 2688 HK), certain Cyclicals and Health Care in Europe (Basic Fit, BFIT.NL; BFIT NA; Swedish Orphan Biovitrum, SOBI.SE; SOBI SS), and outsourcing/jobs info in Japan (Benefit One, BONE.JP; 2412 JP)

India: large banks, paint producers, and food companies. These include Asian Paints (API.IN; APNT IN), HDFC Bank (HFC.IN; HDFCB IN), and Britannia Industries (BRI.IN; BRIT IN).

Other emerging: Top Glove (TOGL.MY; TOPG MK).

Frontier: Saudi Arabia banks, chemical producers, and mining companies: Riyad Bank (RIB.SA; RIBL AB), Saudi Kayan Petrochemical (SAK.SA; KAYAN AB), Saudi Arabian Mining (SAM.SA; MAADEN AB).

Global Sector Commentary

Posted on June 22, 2018June 22, 2018 by Kenley Scott

Key points from this week’s commentary:

A clear majority of 47 global markets are back in Downtrend. Shifts of key markets, including France, Germany, China, South Korea, and Hong Kong, this week.

The U.S. is among a few remaining positively trending markets (including Australia, Canada, India), but defensive rotation seems to be underway.

Global Sector Commentary

Posted on June 15, 2018June 16, 2018 by Kenley Scott

Key points from this week’s commentary:

A quick look at industry groups that are leading/lagging on a year-to-date basis, and the top performing stocks within each group.

Americas

Symbol	Name	# of Stocks	Price, % Chg YTD	Best/Worst YTD Stocks (>$500M mkt cap)
G5971	Retail/Whlsle-Jewelry	9	46.7%	Fosil (FOSL, +280%), Movado (MOV, +53%)
G3270IG.CA	Computer Sftwr-Desktop CA	24	46.2%	Amaya (TSGI.CA, +35%)
G7810	Leisure-Movies & Related	20	41.3%	Netflix (NFLX, +105%), Eros Internationl (EROS, +40%)
G3559	Retail-Internet	31	39.3%	Carvana (CVNA, +117%), Etsy (ETSY, +109%), Shutterfly (SFLY, +89%)
G3220	Computer Sftwr-Security	30	39.0%	Okta (OKTA, +107%), Sailpoint Tech (SAIL, +90%), Rapid7 (RPD, +81%)
G3583	Computer Sftwr-Enterprse	62	36.0%	Twilio (TWLO, +150%), Liveperson (LPSN, +101%), Coupa Software (COUP, +99%)
G3270	Computer Sftwr-Desktop	7	35.1%	Redhat (RHT, +45%), Adobe Systems (ADBE, +44%)
G8077	Retail-Department Stores	5	32.8%	Dillards (DDS, +50%), Macy’s (M, +50%), Kohls (KSS, +35%)
G1520IG.BR	Bldg-Resident/Comml BR	8	-28.2%	Ez Tec Empe.E Partp. (EZT.BR, -27%), Cyrela Brazil Realty (3CY.BR, -22%)
G3141IG.BR	Apparel-Shoes & Rel Mfg BR	5	-30.5%	Alpargatas (Al3.BR, -35%), Arezzo (ARZ.BR, -26%)
G6020IG.AR	Banks-Money Center AR	8	-33.3%	Grupo Supervielle (GSV.AR, -28%), Banco Patagonia (BPT.AR, -20%)
G5912IG.BR	Retail-Drug Stores BR	5	-35.6%	Raia Drogasil (RAIA.BR, -30%)
G6732IG.BR	Real Estate Dvlpmt/Ops BR	26	-37.1%	Ecod.Infu.E Log (EON.BR), -38%), CMPH.Cocs. Rodoviarias (CCR.BR, -35%), BR Malls (BRM.BR, -28%)

Global Sector Commentary

Posted on June 8, 2018June 8, 2018 by Kenley Scott

Attached is the latest Sector Commentary from Global Sector Strategist Kenley Scott.

Key points from this week’s commentary:

Growth stocks in developed Europe are acting well. A third of our European Focus List is actionable, with high representation from Tech and Cyclicals.
- Best names include Trigano (TRI.FR; TRI FP), Technogym (TGYM.IT; TGYM IM), and Keywords Studios (KWS.GB; KWS LN).
Emerging markets still generally sideways-to-weak (except India), but a small uptick in buyable growth names.
- Best names include Kweichow Moutai (KCM.CN; 600519 CH), Topglove (TOGL.MY; TOPG MK), and SKC Kolon PI (SKJ.KR; 178920 KS).

Sector Commentary

Posted on June 1, 2018June 1, 2018 by Kenley Scott

Key points from this week’s commentary:

While the market is still not out completely of the corrective phase that began at the end of January, there are signs of it nearing a conclusion. Notably, small caps have already broken back into all-time highs and the Nasdaq Composite is now back within 1% of highs.
Revisiting the comparison between the current market correction and the correction from late 1997 to early 1998, the best comparison is between the leading indices in each case, the S&P 500 then (first chart) and the S&P 600 now (second chart).

Global Energy Sector

Posted on May 30, 2018February 1, 2019 by Kenley Scott

Key Points:

U.S.

Energy sector testing resistance from December 2016 highs, with support at the now rising 50-DMA.
Oil prices strong despite rising U.S. demand as supply worries from Iran boost market. Risks include OPEC/Russia talks to re-introduce 1 MMbpd of supply and demand concerns over higher U.S. interest rates and trade concerns.
Sector now easily outperforming the S&P 500 over the trailing six months. Also, it is beating oil prices even during the recent pullback, which is encouraging.
U.S. E&P group ranked first.
Top picks FANG (Permian), WRD (Eagle Ford), CLR (Bakken).

Global Sector Commentary

Posted on May 25, 2018May 25, 2018 by Kenley Scott

Key points from this week’s commentary:

Average number of weekly breakouts in the U.S. over 10 years and one year is just over 100.
From January correction to first week in May, average was just 60.
Last three weeks’ average is greater than 130.
‘Sweet spot’ coming from $1B-20B market cap in Cyclical, Health Care, Tech, and Transport sectors.
Focus List picks from this sweet spot are GOOS, SUPN, VEEV, PSTG, SPLK, GRUB, MPWR, ZTO.

Global Sector Commentary

Posted on May 18, 2018May 18, 2018 by Kenley Scott

Global Markets Recap

Twenty-three developed markets gained 0.3% on average, slightly extending their average gain of 1.4% from the previous week. Sixteen markets are in a Confirmed Uptrend, including one in an Uptrend Under Pressure. Six markets
are in a Rally Attempt.
• The Stoxx 600 gained 0.8% and moved to just below 52-week highs. It built on the prior week’s gains of 1.4% and rose for an eighth consecutive week. Smaller markets, including Portugal and Norway, were the largest EMEA gainers. The U.S. market fell about 50bps, but on generally light volume. APAC markets were fairly quiet, but Japan (+0.8%) managed to gain for an eighth week.

Global Sector Commentary

Posted on May 11, 2018May 12, 2018 by Kenley Scott

Key points from this week’s commentary:

Russell 2000 small-cap index nearest of all major indices to all-time highs (-1%).
Of the four major Russell indices (Large Value-IWD, Large Growth-IWO, Small Value-IWN, Small Growth-IWO), Small Growth is the leader on a year-to-date basis, having taken the place of Large Growth since mid-March.
Of the Russell 2000 stocks meeting the of >15% 2018 sales growth estimated, >25% 2018 and 2019 EPS growth estimated, and trading at or near pivot, a majority are from the Energy and Technology sectors. These include:
- CRS, WTW, FRPT, GTLS, MRC, NR, PDCE, REI, SUPN (USFL), APPF, VRTU, UPLD, MODN, NEWR, PSTG (USFL).