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

<ul>
<li>Last week we noted that the bullish reversals had begun, with the MSCI ACWI (ACWI-US), STOXX Europe 50, and SPX the first few to reverse topside their 4-month downtrends.</li>
<li>As we discuss below, bullish reversals are proliferating globally, something that continues to support our belief that global equities are bottoming.</li>
<li>Global growth Sectors continue to gain momentum and have emerged as leadership -- overweight growth. Sectors covered today include Technology, Consumer Discretionary, and Industrials -- add exposure</li>
</ul>


Last week we noted that the bullish reversals had begun, with the MSCI ACWI (ACWI-US), STOXX Europe 50, and SPX the first few to reverse topside their 4-month downtrends.
As we discuss below, bullish reversals are proliferating globally, something that continues to support our belief that global equities are bottoming.
Global growth Sectors continue to gain momentum and have emerged as leadership -- overweight growth. Sectors covered today include Technology, Consumer Discretionary, and Industrials -- add exposure


Bullish Reversals Proliferate; Stick With Growth; Buy Ideas in Tech, Discretionary, & Industrials

<ul>
<li>Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany's DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).</li>
<li>The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.</li>
<li>Relative strength on Japan's TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors</li>
</ul>


Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany's DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).
The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.
Relative strength on Japan's TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors


Japan Emerging as Leadership; Actionable Themes: Japan and Defensives

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Back on the <a href="https://www.woolworthsgroup.com.au/content/Document/2019-11-01%20Restructure%20Booklet.pdf" target="_blank" rel="noopener">3 July 2019</a>, supermarket and grocery chain giant <a href="https://www.smartkarma.com/entities/woolworths-ltd" target="_blank" data-smartkarma-citation="entities:500:1" rel="noopener">Woolworths Ltd (WOW AU)</a> announced plans to spin off its retail drinks and hospitality business via <a href="https://www.smartkarma.com/entities/endeavour-group-ltd-australia" target="_blank" data-smartkarma-citation="entities:33512:1" rel="noopener">Endeavour Group (EDV AU)</a>.
The demerger was expected to simplify the organisational structure, unlock long-term shareholder value for the company, and provide Endeavour greater access to capital. Shareholders agreed and approved the demerger at the EGM on the <a href="https://www.woolworthsgroup.com.au/content/Document/2019%20AGM%20%26%20EGM%20results.pdf" target="_blank" rel="noopener">16 December 2019</a>.
The internal structure was completed on the <a href="https://www.woolworthsgroup.com.au/content/Document/Completion%20of%20Internal%20Restructure%20and%20ALH%20Merger.pdf" target="_blank" rel="noopener">4 February 2020</a>, such that Woolies held 85.4% in Endeavour. The Bruce Mathieson Group held the remaining 14.6%. 
The timing of the demerger was subsequently <a href="https://www.woolworthsgroup.com.au/content/Document/Woolworths%20Group%20update%20on%20impact%20of%20coronavirus%20(COVID-19).pdf" target="_blank" rel="noopener">delayed</a> on account of Covid-19. 
A new meeting was held on the 18 June to re-consider the demerger, which was also <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02385935-2A1304198?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">duly passed</a>. 
Via an in-specie distribution to existing shareholders, Woolies' shareholders received one Endeavour share for every Woolies' share, in addition to maintaining their one share in Woolies. 
Woolies commenced trading on the ASX, ex-entitlement, on the 24 June, the same day Endeavour commenced trading. 
Woolies is now a cleaner supermarket play, whereas Endeavour may find itself on the wrong side of ESG investors. 
More below the fold.

Back on the 3 July 2019, supermarket and grocery chain giant Woolworths Ltd (WOW AU) announced plans to spin off its retail drinks and hospitality business via Endeavour Group (EDV AU).
The demerger was expected to simplify the organisational structure, unlock long-term shareholder value for the company, and provide Endeavour greater access to capital. Shareholders agreed and approved the demerger at the EGM on the 16 December 2019.
The internal structure was completed on the 4 February 2020, such that Woolies held 85.4% in Endeavour. The Bruce Mathieson Group held the remaining 14.6%. 
The timing of the demerger was subsequently delayed on account of Covid-19. 
A new meeting was held on the 18 June to re-consider the demerger, which was also duly passed. 
Via an in-specie distribution to existing shareholders, Woolies' shareholders received one Endeavour share for every Woolies' share, in addition to maintaining their one share in Woolies. 
Woolies commenced trading on the ASX, ex-entitlement, on the 24 June, the same day Endeavour commenced trading. 
Woolies is now a cleaner supermarket play, whereas Endeavour may find itself on the wrong side of ESG investors. 
More below the fold.

Woolworths/Endeavour: Taking A Bet On Alcohol & Gaming

Australia

Metcash Limited is a marketing and distribution company operating in the food and other consumer goods sectors.  The Company operates distribution centers serving grocery products for independent retail grocery stores, liquor distribution centers and cash and carry warehouses which serve retailers and businesses in the grocery, liquor, food services and convenience stores.

Treasury Wine Estates Ltd was founded in 2010 and is headquartered in Southbank, Victoria, Australia. The Company's line of business includes vineyard operations and international marketing and distribution of wine.

Blackmores Limited manufactures and markets vitamin, herbal, mineral supplements and natural skin and hair treatment products in Australia and New Zealand. These products are supplied to the over the counter retail market and to health care professionals. The Company also has a line of natural beauty and aromatherapy products and its products are distributed in South East Asia.

GrainCorp Limited operates as a food ingredients and agribusiness company. The Company processes and distributes wheat, barley, and canola, as well as offers a range of malt products and service to brewers and distillers. GrainCorp also supplies and refines edible oils. GrainCorp serves customers worldwide.*Dummy ticker for index membership mapping

Australian Agricultural Projects Ltd distributes and markets products in the olive oil business.  The Company supplies extra virgin olive oil and other food products related to olive oil, from domestic suppliers and then packages and brands it for distribution and export.

Australian Agricultural Projects (AAP AU)

Bega Cheese Ltd. provides dairy food products. The Company offers a variety of cheese products including can, stringers, fingers, slice, whey powder, processed, natural, and reduced fat cheddar cheeses. Bega Cheese's exports its whey powder to Asian countries. Bega Cheese's also distributes its cheese products to international commodity markets.

Elders Limited owns and operates rural services businesses. The Company brokers and processes wool, buys and sells grain, and retails seed, fertilizer, and animal health and other farm products. Elders operates in Australia.

Costa Group Holdings Limited operates as a holding company. The Company, through its subsidiaries, grows and markets fruits and vegetables. Costa Group Holdings supplies its products to supermarket chains and independent grocers worldwide.

Bubs Australia Limited produces packaged food products. The Company supplies organic baby food, milk formulas, cereals, and other nutritional products for children. Bubs Australia serves customers in Australia.

Tassal Group Limited produces and markets Atlantic salmon and ocean trout.  The Company's product is marketed under the Royal Tasman Salmon brand.  The products are distributed in Australia, Japan and other international markets.

Alibaba Health Information Technology Limited is an integrated healthcare information and content service provider. The Company uses product identification, authentication, and tracking system data for its healthcare information.

LAWSON, INC. operates a chain of convenience stores in Japan. The Company sells a variety of products including fast food, beverages, snacks, magazines, newspapers, and sundry goods.

KOBE BUSSAN CO., LTD. is a supermarket franchise store operator which mainly deals in foods stuffs.  The Company also has direct-run stores.

PT Sumber Alfaria Trijaya Tbk operates a chain of retail supermarkets.

Sprouts Farmers Market, Inc. operates a chain of retail grocery stores. The Company offers meats, cheese, dairy products, bakery, beer and wine, bulk foods, vitamins, and supplements. Sprouts Farmers Market serves customers throughout the United States.

Colruyt SA retails goods and offers computer and printing services.  The Company retails food and non-food items through Colruyt supermarkets, and Coccinelle, UGA, and Codi Cash supermarkets and cash and carry stores.  It retails toys, baby products, and school supplies through Dreamland stores. Colruyt markets computers and offers programming services.

J Sainsbury plc retails food.  The Company operates Sainsbury supermarkets in the United Kingdom, convenience stores, an Internet-based home delivery service, and Sainsbury Bank.  The Bank offers saving accounts, credit cards, mortgages, insurance products, and consumer loans.

Axfood AB is a food retailer and wholesaler.  The Company owns and operates supermarkets, food discount stores, distribution centers, and warehouses. Axfood owns Hemkop, Willys, Willys Hemma, and Dagab, and supports the Spar, Tempo, and Vivo stores, which are privately owned and operated through franchise agreements, in Sweden.

Cencosud SA is a multi-brand retailer in South America.  The Company operates through a  number of formats, including supermarkets, home improvement stores, shopping  centers and department stores.  Cencosud is headquartered in Chile and has  operations in Chile, Argentina, Brazil, Colombia and Peru.

Clicks Group Ltd. owns and operates chains of retail stores.  The Company operates health, beauty and lifestyle products; pharmaceuticals; and recorded music.

Endeavour Group Limited of Australia retail drinks and hospitality business. The Company offers distilled spirits, including neutral spirits and ethyl alcohol used in blended wines and distilled liquors. Endeavour Group serves customers in Australia.

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Endeavour Group /Australia (EDV AU)

Bullish Reversals Proliferate; Stick With Growth; Buy Ideas in Tech, Discretionary, & Industrials

Bullish reversals begun last week in $ACWI, $SPX, and $STOXX Europe 50, with each reversing topside their 4-month downtrends. Now, bullish...

Vermilion Research

Japan Emerging as Leadership; Actionable Themes: Japan and Defensives

Despite the intact downtrend on Japan's TOPIX, relative strength is reversing topside a 4.5-year downtrend; this tells us Japan is emerging as...

Vermilion Research

Woolworths/Endeavour: Taking A Bet On Alcohol & Gaming

I side with ESG-focused super investors' concerns on Endeavour, given its exposure to gaming & alcohol. Woolies is now a pure-play on grocery and...

David Blennerhassett

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