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>The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.</li>
<li>Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.</li>
<li>It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.</li>
</ul>


The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.
Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.
It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.


Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.</li>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> has not declared a dividend yet due to its IPO, while <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a>'s suspension could lead to index deletion in June or July. </li>
<li>Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.</li>
</ul>


Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.

CNOOC Ltd (883 HK) has not declared a dividend yet due to its IPO, while Sunac China Holdings (1918 HK)'s suspension could lead to index deletion in June or July. 
Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.


HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

<ul>
<li>Japan's Nikkei pushed above out 27k pivot and is now tactical buy support with 28,200-400 the fresh sell zone. Impulsive squeeze needs the dust to settle.</li>
<li>Fresh sell/short resistance lies at 28,200/500 where price, trendline and the 50 dma coincide. Expect a dip and rally sequence in order to build a secondary top.</li>
<li>The impulsive rise from 25k to current levels was stronger than we expected and got this rally extension wrong.</li>
</ul>


Japan's Nikkei pushed above out 27k pivot and is now tactical buy support with 28,200-400 the fresh sell zone. Impulsive squeeze needs the dust to settle.
Fresh sell/short resistance lies at 28,200/500 where price, trendline and the 50 dma coincide. Expect a dip and rally sequence in order to build a secondary top.
The impulsive rise from 25k to current levels was stronger than we expected and got this rally extension wrong.


Nikkei 27k Pivot Hangs in the Balance - Fresh Buy/Sell Levels

<ul>
<li>
<a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591)</a> replaces <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303)</a> in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225</a> at the close of trading on 1 April due to Shinsei Bank not trading on the Prime Market.</li>
<li>We estimate there will be passive buying of 27.5m shares on <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> while there will be selling of 2.75m shares on <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> </li>
<li>There appears to be some pre-positioning on <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> - the stock could outperform heading into index inclusion. </li>
</ul>



Orix Corp (8591) replaces Shinsei Bank (8303) in the Nikkei 225 at the close of trading on 1 April due to Shinsei Bank not trading on the Prime Market.
We estimate there will be passive buying of 27.5m shares on Orix Corp (8591 JP) while there will be selling of 2.75m shares on Shinsei Bank (8303 JP) 
There appears to be some pre-positioning on Orix Corp (8591 JP) - the stock could outperform heading into index inclusion. 


Nikkei 225 Index Rebalance: ORIX (8591) Replaces Shinsei Bank (8303)

<ul>
<li>Japan's Nikkei 27,000 inflection lows are under pressure and expected to give way in Q2. We outline a near term give back, recovery rise into the higher degree sell zone.</li>
<li>RSI displays a more bullish tactical lean (bull divergence and constructive wedge) into near term weakness.</li>
<li>Nikkei 28,300 is the macro sell zone. Near term pivot support at 26,200.</li>
</ul>


Japan's Nikkei 27,000 inflection lows are under pressure and expected to give way in Q2. We outline a near term give back, recovery rise into the higher degree sell zone.
RSI displays a more bullish tactical lean (bull divergence and constructive wedge) into near term weakness.
Nikkei 28,300 is the macro sell zone. Near term pivot support at 26,200.


Japan

The Nikkei-225 Stock Average is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. The Nikkei Stock Average was first published on May 16, 1949, where the average price was ¥176.21 with a divisor of 225. 

Nikkei 225 (NKY INDEX)

Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Sticking With Cyclical Value & Defensives; Adding Large-Cap Japan Technology. 2-3 week bounce has likely run its course with $TOPIX $Nikkei 225,...

Vermilion Research

HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments

We estimate a fair value of 240.73 DIPS for the HSCEI 2022 dividend futures after adjusting for CNOOC/Sunac/JD.com. We would be sellers of the...

Brian Freitas

Nikkei 27k Pivot Hangs in the Balance - Fresh Buy/Sell Levels

Japan's Nikkei pushed above out 27k pivot and is now tactical buy support with 28,200-400 the fresh sell zone. Impulsive squeeze needs the dust to...

Thomas Schroeder

Nikkei 225 Index Rebalance: ORIX (8591) Replaces Shinsei Bank (8303)

Orix Corp replaces Shinsei Bank in the Nikkei225 Index at the close on 1 April. Passive trackers will need to buy 27.5m shares of Orix and sell...

Brian Freitas

Nikkei Trade Levels

Japan's Nikkei 27,000 inflection lows are under pressure and expected to give way in Q2. We outline a near term give back, recovery rise into the...

Thomas Schroeder