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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).</li>
<li>As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).</li>
<li>Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.</li>
</ul>


Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).
As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).
Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.


Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS.  Higher Yields and Lower Equities as Major US Indices were lower; Focus on Jackson Hole Speech from Powell; Fed Collins Hints at hikes; Boeing Supply Issues. </li>
<li>JAPAN. NKY Futures -1.9% vs Cash; USDJPY 145.8; Fukushima Water Release prompts China Backlash; Gasoline reachs 15 year high - govt considers subsidies; Boon from Yen for Japan Majors. </li>
<li>JAPAN X: Farewell to lifetime employment ?   Japan's workers are embracing job hopping. This is driving higher wages as labor get reallocated to higher value added roles.</li>
</ul>


OVERSEAS.  Higher Yields and Lower Equities as Major US Indices were lower; Focus on Jackson Hole Speech from Powell; Fed Collins Hints at hikes; Boeing Supply Issues. 
JAPAN. NKY Futures -1.9% vs Cash; USDJPY 145.8; Fukushima Water Release prompts China Backlash; Gasoline reachs 15 year high - govt considers subsidies; Boon from Yen for Japan Majors. 
JAPAN X: Farewell to lifetime employment ?   Japan's workers are embracing job hopping. This is driving higher wages as labor get reallocated to higher value added roles.


Ohayo Japan| Tech Sold as Yields Take Their Toll; JAPAN X: Tradition Ends-Japan Embraces Job Hopping

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

<ul>
<li>Q2'23 revenues for the top 5 WFE players amounted to ~$22 billion down ~10% QoQ and essentially flat YoY.</li>
<li>While WFE spending as a whole will decline 20% YoY, ASML &amp; AMAT are outperforming, LRCX &amp; TEL are underperforming with KLAC somewhere in between.</li>
<li>Increased China WFE spending on legacy tools is helping offset ongoing declines from memory and Logic/Foundry</li>
</ul>


Q2'23 revenues for the top 5 WFE players amounted to ~$22 billion down ~10% QoQ and essentially flat YoY.
While WFE spending as a whole will decline 20% YoY, ASML &amp; AMAT are outperforming, LRCX &amp; TEL are underperforming with KLAC somewhere in between.
Increased China WFE spending on legacy tools is helping offset ongoing declines from memory and Logic/Foundry


Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>Hon Hai beat expecations by nearly 30% but reduced 2023E sales guidance. However, the company's AI server business is expected to take market share and its EV business is developing.</li>
<li>Asustek management provided some clarity on when AI PCs might turn from dream into reality -- 3Q24E is when the company believes they will contribute significantly to sales volume.</li>
<li>Himax reported some improvement in demand from China beleaguered automotive industry and said it expects its dominant global market position for automotive display drivers to continue.</li>
</ul>


Hon Hai beat expecations by nearly 30% but reduced 2023E sales guidance. However, the company's AI server business is expected to take market share and its EV business is developing.
Asustek management provided some clarity on when AI PCs might turn from dream into reality -- 3Q24E is when the company believes they will contribute significantly to sales volume.
Himax reported some improvement in demand from China beleaguered automotive industry and said it expects its dominant global market position for automotive display drivers to continue.


Taiwan Tech Weekly: Hon Hai AI Servers Taking Share, Asus Specifies When AI PCs Will Drive Market

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>U.S. has announced new bans on PE and VC investment into key Chinese tech industries.</li>
<li>Elan Microelectronics, ChipMOS reported good results, two longs to consider as we still see upside.</li>
<li>Apple earnings short-term trades update -- We're closing out both trades, one at a loss and one roughly flat.</li>
</ul>


U.S. has announced new bans on PE and VC investment into key Chinese tech industries.
Elan Microelectronics, ChipMOS reported good results, two longs to consider as we still see upside.
Apple earnings short-term trades update -- We're closing out both trades, one at a loss and one roughly flat.


Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron Ltd Unsp Adr (TOELY US)

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

Ohayo Japan| Tech Sold as Yields Take Their Toll; JAPAN X: Tradition Ends-Japan Embraces Job Hopping

Higher Yields, Tech Sell Off Ahead of Powell's Speech; NKY Futures -1.9% vs Cash; USDJPY 145.8; Fukushima Water Release prompts China Backlash;...

Mark Chadwick

Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines

WFE spend to drop 20% YoY, ASML & AMAT are outperforming, LRCX & TEL are underperforming, KLAC somewhere in between. Increased China WFE spend...

William Keating

Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Also, Elan Microelectronics and ChipMOS reported strong results. The two companies represent two Longs to consider, we still see upside.

Vincent Fernando, CFA

Price Gauge

52-week Range

Market Cap (USDm)

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Dividend (Yield)

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

Ohayo Japan| Tech Sold as Yields Take Their Toll; JAPAN X: Tradition Ends-Japan Embraces Job Hopping

Higher Yields, Tech Sell Off Ahead of Powell's Speech; NKY Futures -1.9% vs Cash; USDJPY 145.8; Fukushima Water Release prompts China Backlash;...

Mark Chadwick

Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines

WFE spend to drop 20% YoY, ASML & AMAT are outperforming, LRCX & TEL are underperforming, KLAC somewhere in between. Increased China WFE spend...

William Keating

Taiwan Tech Weekly: Hon Hai AI Servers Taking Share, Asus Specifies When AI PCs Will Drive Market

Also -- According to media reports, Apple has bought all of TSMC's leading-edge 3nm capacity and may have exclusivity for this 3nm production...

Vincent Fernando, CFA

Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Also, Elan Microelectronics and ChipMOS reported strong results. The two companies represent two Longs to consider, we still see upside.

Vincent Fernando, CFA