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>In last week's Compass (July 26) we discussed positive signals that we believe suggested the lows for this bear market may have already been established, or that downside is limited.</li>
<li>We continue to see more evidence that supports this claim; as a result, we are upgrading our outlook to neutral.</li>
<li>The SPX is reversing topside its 4-month downtrend, and the Russell 2000 (IWM), Russell Micro-Caps (IWC), and Russell 2000Growth (IWO) are each reversing topside their 9-month downtrends; the bottom's in.</li>
</ul>


In last week's Compass (July 26) we discussed positive signals that we believe suggested the lows for this bear market may have already been established, or that downside is limited.
We continue to see more evidence that supports this claim; as a result, we are upgrading our outlook to neutral.
The SPX is reversing topside its 4-month downtrend, and the Russell 2000 (IWM), Russell Micro-Caps (IWC), and Russell 2000Growth (IWO) are each reversing topside their 9-month downtrends; the bottom's in.


S&P 500 Reverses 4-Month Downtrend; Upgrading Consumer Discretionary to Market Weight

Invesco QQQ Trust Series 1 / Technical Analysis

<ul>
<li>Following panic selling that we have outlined over the past month, we finally saw panic buying last Friday in the form of 92% upside volume on the NYSE.</li>
<li>There is hope that this panic buying could signal a major bottom, but we still need to see more confirmation before declaring that the low is in.</li>
<li>We are watching the Nasdaq 100 (QQQ) and the steep RS uptrends on Utilities (XLU) and Staples (XLP) for more confirmation that a major low is in place. Details below.</li>
</ul>


Following panic selling that we have outlined over the past month, we finally saw panic buying last Friday in the form of 92% upside volume on the NYSE.
There is hope that this panic buying could signal a major bottom, but we still need to see more confirmation before declaring that the low is in.
We are watching the Nasdaq 100 (QQQ) and the steep RS uptrends on Utilities (XLU) and Staples (XLP) for more confirmation that a major low is in place. Details below.


Panic Buying Achieved, Waiting for More Confirmation of a Bottom;Buying Staples & Auto Dealers/Parts

iShares Russell 2000 ETF / Technical Analysis

<ul>
<li>The false breakout in the Russell 2000 (IWM) tells us that the mixed market environment is back, and we no longer see a broad-based bull market.</li>
<li>Key supports: 4545 on S&amp;P 500, $383 on NDX (QQQ), $208 on Russell 2000 (IWM), $135 on MicroCaps (IWC), $76.50 on MSCI EAFE (EFA), $54 on MSCI ACWI exUS (ACWX)</li>
<li>If supports hold we expect more consolidation and mixed markets ahead. However, if supports start to break we would turn bearish as we would expect a more significant correction.</li>
</ul>


The false breakout in the Russell 2000 (IWM) tells us that the mixed market environment is back, and we no longer see a broad-based bull market.
Key supports: 4545 on S&amp;P 500, $383 on NDX (QQQ), $208 on Russell 2000 (IWM), $135 on MicroCaps (IWC), $76.50 on MSCI EAFE (EFA), $54 on MSCI ACWI exUS (ACWX)
If supports hold we expect more consolidation and mixed markets ahead. However, if supports start to break we would turn bearish as we would expect a more significant correction.


U.S. Equity Strategy: Major Indexes Testing Critical Supports; Buying Consumer Discretionary Stocks

US Treasury (10 Yr Generic) / Technical Analysis

<p>We are beginning to see some mild deterioration in market dynamics, including a break below the key 1.45% support level on the 10-year Treasury yield which is coupled with underperformance from small-caps and value Sectors. Still, other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market.</p>

We are beginning to see some mild deterioration in market dynamics, including a break below the key 1.45% support level on the 10-year Treasury yield which is coupled with underperformance from small-caps and value Sectors. Still, other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market.

U.S. Equity Strategy: Shifting To Growth As 10-Yr Yield Breaks Key Support

<p>The rotation out of stay-at-home/COVID-19 beneficiary stocks and into reopening/economically sensitive stocks that we highlighted last week has continued, leading us to make several upgrades and one downgrade (see first bullet below). This broadening-out of participation and several other bullish developments highlighted below tells us the bulls have the upper hand. In today’s report we highlight attractive Groups and stocks within Discretionary, Transportation, and Manufacturing: CD-05 Auto Parts Retailers, TR-05 Large-Cap Air Freight &amp; Logistics, TR-12 Large-Cap Trucking, and MF-31 Building Products and Fixtures.</p>

The rotation out of stay-at-home/COVID-19 beneficiary stocks and into reopening/economically sensitive stocks that we highlighted last week has continued, leading us to make several upgrades and one downgrade (see first bullet below). This broadening-out of participation and several other bullish developments highlighted below tells us the bulls have the upper hand. In today’s report we highlight attractive Groups and stocks within Discretionary, Transportation, and Manufacturing: CD-05 Auto Parts Retailers, TR-05 Large-Cap Air Freight &amp; Logistics, TR-12 Large-Cap Trucking, and MF-31 Building Products and Fixtures.

U.S. Equity Strategy: Healthy Sector Rotations Continue

United States

LKQ Corporation offers automotive products and services. The Company provides alternative collision replacement parts, recycled engines and transmissions, as well as remanufactured engines. LKQ offers customers in North America, Central America and Europe replacement systems, components and parts for the repair of automobiles and light, medium, and heavy-duty trucks.

Pool Corporation is a wholesale distributor of swimming pool supplies, equipment and related leisure products. The Company's inventory includes a diverse range of products, from construction materials, replacement parts and fencing to pool care products and spas.

Weyco Group, Inc., and its subsidiaries, distribute men's footwear.  The Company offers both casual and dress shoes which are sold on a worldwide basis.

Dick's Sporting Goods, Inc. operates as a sporting goods retailer that manages stores primarily in the eastern and central United States. The Company owns stores that offers a broad selection of brand name sporting goods equipment, apparel, and footwear.

Burlington Stores, Inc. owns and operates clothing retail stores. The Company offers, through its stores and internet sites, men's, women's, and children's apparel. Burlington Holding operates within the United States and Puerto Rico.

Tractor Supply Company operates a retail farm store chain in the United States. The Company provides farm maintenance products, animal products, general maintenance products, lawn and garden products, light truck equipment, work clothing, and other products.  Customers include hobby, part-time, and full-time farmers and ranchers, as well as rural customers, contractors, and tradesman.

Dollar General Corporation operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern, and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health, beauty, pet supplies, and non-consumables such as seasonal merchandise.

Abercrombie & Fitch Co.  a specialty retailer that operates stores and direct-to-consumer operations. Through these channels, the Company sells: casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids.

Murphy USA Inc. produces and distributes petroleum products. The Company engages in refining, marketing, and transportation of oil and gas products. Murphy USA provides products and services worldwide.

Etsy, Inc. provides e-commerce services. The Company offers handmade and vintage items, art, and supplies, as well as regular items such as clothing, housewares, paper goods, candles, bags and purses, music, and wood working items. Etsy serves users throughout the United States.

Jardine Cycle & Carriage Limited operates as an investment holding company. The Company, through its subsidiaries, invests in automotive, consumer finance, utilities and infrastructure, heavy equipment and mining, property, agribusiness, cement, and consumer products businesses. Jardine Cycle & Carriage serves customers in South East Asia.

S.A. D'Ieteren N.V. imports to and distributes European- and Asian-manufactured cars in Belgium.  The Company offers vehicle glass repair and replacement services in Europe, North and South America, Asia, Australia, and New Zealand.

Canon Marketing Japan Inc. distributes all Canon products in the domestic market.  The Company sells copying machines, printers, digital cameras, facsimile, scanner, projectors, and calculators.

Inchcape PLC is a global automotive distributor and retailer. The Company acts as a vehicle and parts distributor in multiple markets. In these markets, Inchcape has exclusive responsibility for managing the value chain on behalf of a focused portfolio of premium and luxury brand partners. Over two thirds of the Group profit is derived from Asia Pacific and emerging markets.

Wuchan Zhongda Group Co.,Ltd. offers supply chain services. The Company purchases and distributes metal materials, ores, automobiles, chemicals, rubbers, and energy products. Wuchan Zhongda Group also conducts finance, medical, thermal power, and public utility businesses.

Bapcor Limited retails automotive parts. The Company offers aftermarket parts, accessories, and services. Bapcor serves customers in Australia.

Sinomach Automobile Co., Ltd. operates in the car wholesale and retail business. The company changed business sector from machinery to automobile wholeslae after the acquisition of China Automobile Trading Co Ltd.

Liaoning Cheng Da Co., Ltd. imports and exports a variety of textile products including knitting products, household textile products, and apparel.  The Company also operates pharmaceutical chain stores and provides processing services.

Zhejiang Orient Holdings Co., Ltd. imports and exports textile products.  The Company exports cotton and wool knitwear, household textile products, and accessories, as well as imports textile raw materials and equipment.  Zhejiang Orient also provides apparel processing services, acts as a cargo transportation agency, and operates in properties.

Xinhua Winshare Publishing and Media Company Ltd. retails and distributes books and offers services.  The Company operates a chain of retail bookstores, distributes textbooks and supplementary materials, and provides ancillary support and services to book publishers.

Genuine Parts Company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials.  The Company conducts business throughout most of the United States, in Canada, and in Mexico.

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Genuine Parts Co (GPC US)

S&P 500 Reverses 4-Month Downtrend; Upgrading Consumer Discretionary to Market Weight

We continue to see more evidence suggesting the lows are in; as a result, we are upgrading our outlook to neutral. 4-month downtrend reversal for...

Vermilion Research

Panic Buying Achieved, Waiting for More Confirmation of a Bottom;Buying Staples & Auto Dealers/Parts

We finally saw panic buying last Friday in the form of 92% upside volume on the NYSE. There is hope that this panic buying could signal that a...

Vermilion Research

U.S. Equity Strategy: Major Indexes Testing Critical Supports; Buying Consumer Discretionary Stocks

Market dynamics have deteriorated along with the major averages, and many are testing critical supports; as long as supports hold we expect more...

Vermilion Research

U.S. Equity Strategy: Shifting To Growth As 10-Yr Yield Breaks Key Support

Upgrading Technology, Downgrading Financials, Materials, and Industrials. We discuss implications of the break below the key 1.45% support level on...

Vermilion Research

U.S. Equity Strategy: Healthy Sector Rotations Continue

The rotation out of stay-at-home/COVID-19 beneficiary stocks and into reopening/economically sensitive stocks that we highlighted last week has...

Vermilion Research

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