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

SPDR S&P Oil & Gas Exploration / Technical Analysis

Weak market dynamics continue to be counterbalanced by the fact that there is an absence of breakdowns at the index and Sector level; even the weakest Sectors such as Energy (XLE, XOP, RYE) and Transportation (IYT, XTN, JETS) are holding above key supports. Until we start to see breakdowns at the Sector and index level, we remain constructive overall.Charts highlighted: XOP, JETS, S&amp;P 500, IWM, IWC, WTI Crude Oil, Copper, US dollar, CMCSA, CHTR, LBRDA, AMT, SBAC, ACN, INFY, EQIX, WIT, CTSH, IT, WM, RSG, WCN, and ROL

Weak market dynamics continue to be counterbalanced by the fact that there is an absence of breakdowns at the index and Sector level; even the weakest Sectors such as Energy (XLE, XOP, RYE) and Transportation (IYT, XTN, JETS) are holding above key supports. Until we start to see breakdowns at the Sector and index level, we remain constructive overall.Charts highlighted: XOP, JETS, S&amp;P 500, IWM, IWC, WTI Crude Oil, Copper, US dollar, CMCSA, CHTR, LBRDA, AMT, SBAC, ACN, INFY, EQIX, WIT, CTSH, IT, WM, RSG, WCN, and ROL

U.S. Equity Index and Sector Breakdowns Remain Absent; Buying Communications & Services Stocks

Founder & CEO. Oil markets macro-analysis., Vanda Insights

Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Global Energy Markets

Commodities

The troika of a festering Delta wave, a slew of weak July macro-economic data and the Fed signalling plans to begin tapering its asset purchases by the end of this year proved lethal for crude in the week to August 20. Brent futures notched their longest losing streak since February 2018 with a cumulative slump of nearly 9% over seven trading sessions at Friday's settle. There is something the markets haven’t yet noticed or paid heed to, but is evident if you look closely at the global data on the Delta wave – it is starting to plateau! China appears to be on the cusp of squashing its month-old Delta wave. And though cases as well as hospitalisations and deaths are continuing to climb in the US, they remain concentrated in parts of the southern states and a return to Covid-era restrictions on mobility and non-essential businesses is all but ruled out.And let us not forget OPEC+. It is unlikely to stand by and watch crude in a tailspin on expectations of the market swinging into oversupply. The alliance’s 400,000 b/d monthly supply boost is not cast in stone.All in, we think much of Brent’s 16% decline from the 32-month highs notched on July 5 may be justified for the time being, but we wouldn’t bet on a continued slide.

The troika of a festering Delta wave, a slew of weak July macro-economic data and the Fed signalling plans to begin tapering its asset purchases by the end of this year proved lethal for crude in the week to August 20. Brent futures notched their longest losing streak since February 2018 with a cumulative slump of nearly 9% over seven trading sessions at Friday's settle. There is something the markets haven’t yet noticed or paid heed to, but is evident if you look closely at the global data on the Delta wave – it is starting to plateau! China appears to be on the cusp of squashing its month-old Delta wave. And though cases as well as hospitalisations and deaths are continuing to climb in the US, they remain concentrated in parts of the southern states and a return to Covid-era restrictions on mobility and non-essential businesses is all but ruled out.And let us not forget OPEC+. It is unlikely to stand by and watch crude in a tailspin on expectations of the market swinging into oversupply. The alliance’s 400,000 b/d monthly supply boost is not cast in stone.All in, we think much of Brent’s 16% decline from the 32-month highs notched on July 5 may be justified for the time being, but we wouldn’t bet on a continued slide.

Weekly Oil Views: In a Cauldron of Delta Wave, Fed Tapering

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

US Treasury (10 Yr Generic) / Technical Analysis

Charts Highlighted: XLE, RYE, WTI Crude Oil, XLF, XLB, XLI, RCD, EEM, XLU, XLP, AWK, AEE, WMT, PEP, NUE, STLD, X, CMC, SMSMY, SCHN, RYI, TMST, MT, TX, MTL, ETR, FTS, CMS, CNP, LNT, NI, OGE, BKH, NEE, DUK, SO, and AEPCyclical value areas including Financials, Materials, Manufacturing, Transportation, and equal-weighted Discretionary display short-term improvement as interest rates show signs of a potential bottom at 1.13%. This is encouraging, however we are still neutral yet constructive overall. As we noted last week, we need to see the 10-year Treasury yield breach, and hold above, 1.45%, as well as sustained price improvement by small-caps (i.e., IWM above $234.50) before we can declare a new broad-based bull market.

Charts Highlighted: XLE, RYE, WTI Crude Oil, XLF, XLB, XLI, RCD, EEM, XLU, XLP, AWK, AEE, WMT, PEP, NUE, STLD, X, CMC, SMSMY, SCHN, RYI, TMST, MT, TX, MTL, ETR, FTS, CMS, CNP, LNT, NI, OGE, BKH, NEE, DUK, SO, and AEPCyclical value areas including Financials, Materials, Manufacturing, Transportation, and equal-weighted Discretionary display short-term improvement as interest rates show signs of a potential bottom at 1.13%. This is encouraging, however we are still neutral yet constructive overall. As we noted last week, we need to see the 10-year Treasury yield breach, and hold above, 1.45%, as well as sustained price improvement by small-caps (i.e., IWM above $234.50) before we can declare a new broad-based bull market.

10-Year Treasury Yield Below Key Resistance; Buying Utilities, Consumer Staples, and Steel Stocks

The summer bump for oil is over, and the Delta slump is here.
Brent's $70.59/barrel settlement on Friday represented a nearly 9% discount to its 32-month-high settle of $77.16 on the 5th of July.
The Delta wave situation is still fluid. It will keep the market in a state of flux and maintaining a nervous watch on the trajectory of the resurgence and outbreaks, especially in the US and China. 
A return to the dizzying price rally of the past few months is out of the question.
The IEA last week slashed its global demand forecast for the second half of this year by 550,000 b/d from last month. Though OPEC left its demand projections unchanged, it was on the same page with the IEA in upgrading expectations for non-OPEC production, especially the US, in 2022.
Current supply-demand estimates for 2022 suggest OPEC+ may not be able to carry on with its 400,000 b/d monthly tapering path next year without risking oversupply, at least in the first half.
The prospect of having to curtail output for longer as US production returns to growth could spell trouble for the alliance’s cohesion.

The summer bump for oil is over, and the Delta slump is here.
Brent's $70.59/barrel settlement on Friday represented a nearly 9% discount to its 32-month-high settle of $77.16 on the 5th of July.
The Delta wave situation is still fluid. It will keep the market in a state of flux and maintaining a nervous watch on the trajectory of the resurgence and outbreaks, especially in the US and China. 
A return to the dizzying price rally of the past few months is out of the question.
The IEA last week slashed its global demand forecast for the second half of this year by 550,000 b/d from last month. Though OPEC left its demand projections unchanged, it was on the same page with the IEA in upgrading expectations for non-OPEC production, especially the US, in 2022.
Current supply-demand estimates for 2022 suggest OPEC+ may not be able to carry on with its 400,000 b/d monthly tapering path next year without risking oversupply, at least in the first half.
The prospect of having to curtail output for longer as US production returns to growth could spell trouble for the alliance’s cohesion.

Weekly Oil Views: Crude Bids Farewell to Summer Bump, Prices in the Delta Dent

United States

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

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Crude Oil (CL1 COM COMDTY)

U.S. Equity Index and Sector Breakdowns Remain Absent; Buying Communications & Services Stocks

Until we start to see breakdowns at the Sector and index level, we remain constructive overall. Charts highlighted: XOP, JETS, S&P 500, IWM, IWC,...

Vermilion Research

Weekly Oil Views: In a Cauldron of Delta Wave, Fed Tapering

Crude crashed by 9% last week. But we wouldn't bet on a continued freefall. The latest global Delta wave shows signs of plateauing and OPEC+ will...

Vandana Hari

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Our cautious outlook is reinforced by ongoing developments. Relative strength improvement for defensives (Utilities, Staples, Real Estate, Health...

Vermilion Research

10-Year Treasury Yield Below Key Resistance; Buying Utilities, Consumer Staples, and Steel Stocks

Cyclical value areas are improving, but so are defensives. In order to get more bullish, we need to see the 10-year Treasury yield break above...

Vermilion Research

Weekly Oil Views: Crude Bids Farewell to Summer Bump, Prices in the Delta Dent

Goodbye summer bump, hello Delta slump. A fortnight of demand recalibration has shaved 9% off crude's 32-month highs hit in early July. The oil...

Vandana Hari

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