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

US Treasury (10 Yr Generic) / Technical Analysis

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.

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

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.

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

The weight of the evidence suggests that the pullback has begun. This belief is supported by overbought conditions combined with the S&amp;P 500, MSCI ACWI, and nearly all Sectors hitting logical resistance. Assuming the pullback continues, the next question is how deep or damaging will it be? In this report we highlight various market/technical indicators we are monitoring, as well as pointing out attractive set ups within Consumer Discretionary and Health Care Sectors.

The weight of the evidence suggests that the pullback has begun. This belief is supported by overbought conditions combined with the S&amp;P 500, MSCI ACWI, and nearly all Sectors hitting logical resistance. Assuming the pullback continues, the next question is how deep or damaging will it be? In this report we highlight various market/technical indicators we are monitoring, as well as pointing out attractive set ups within Consumer Discretionary and Health Care Sectors.

U.S. Equity Strategy: Has “the Pullback” Begun?

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several weeks. Near-term we are monitoring for S&amp;P 500 support near 2,600 (i.e., the October low) and resistance near 2,817 or the 100- and 50-day moving averages. In today’s report we outline our current concerns along with developments that would cause us to become more constructive on the market. We also highlight attractive set ups within the Financials, Consumer Discretionary, and Health Care Sectors.

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several weeks. Near-term we are monitoring for S&amp;P 500 support near 2,600 (i.e., the October low) and resistance near 2,817 or the 100- and 50-day moving averages. In today’s report we outline our current concerns along with developments that would cause us to become more constructive on the market. We also highlight attractive set ups within the Financials, Consumer Discretionary, and Health Care Sectors.

U.S. Equity Strategy: Retest of October Lows Underway; Upgrading Financials

In last week’s Compass we noted the S&amp;P 500 was near the top end of the uptrend channel and that the index could fall 2.75%-3.25% before we get to uptrend support. Considering the S&amp;P 500 fell roughly 1% last week we believe the recent pause appears to be a normal and healthy pullback within the multi-month uptrend. Despite the potential for additional backing-and-filling toward the uptrend support, our expectation is that this uptrend continues, supporting our overall positive outlook.

In last week’s Compass we noted the S&amp;P 500 was near the top end of the uptrend channel and that the index could fall 2.75%-3.25% before we get to uptrend support. Considering the S&amp;P 500 fell roughly 1% last week we believe the recent pause appears to be a normal and healthy pullback within the multi-month uptrend. Despite the potential for additional backing-and-filling toward the uptrend support, our expectation is that this uptrend continues, supporting our overall positive outlook.

S&P 500: A Pause in the Uptrend - More Consolidation Expected.

United States

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.

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.

Ulta Beauty, Inc. operates a chain of beauty stores. The Company offers cosmetics, fragrance, skin, and hair care products, as well as salon services. Ulta Beauty serves customers throughout the United States.

Williams-Sonoma, Inc. retails cooking and serving equipment, home furnishings, and home accessories through retail stores, mail order catalogs and e-commerce. The Company offers its merchandise under the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, and West Elm.

GameStop Corporation operates specialty electronic game and PC entertainment software stores throughout the United States, Australia, Canada and Europe. The Company stores sell new and used video game hardware, video game software and accessories, as well as PC entertainment software, and related accessories and other merchandise.

Penske Automotive Group, Inc. operates franchised automobile dealerships. The Company's franchises are located throughout the United States, Puerto Rico and the United Kingdom.  Penske Automotive sells new and used vehicles as well as offers maintenance and repair services on all brands it represents.

Ross Stores, Inc. operates two brands of off-price retail apparel and home accessories stores. Ross Stores offers name brand and designer apparel, accessories, footwear, and home fashions at discount prices.

CarMax, Inc. sells at retail used cars and light trucks. The Company purchases, reconditions, and sells used vehicles in its superstores and franchises throughout the United States.

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

Hotai Motor Company Ltd. operates as an automobile dealership. The Company sells and services new and used cars and trucks in Taiwan.

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

Hennes & Mauritz AB (H&M) designs and retails fashions for women, men, teens, and children.  The Company sells a variety trendy, sporty, and classic garments in addition to accessories such as jewelery, bags, and scarves, and cosmetics. H&M owns and operates stores in many European countries and the United States.

Chow Tai Fook Jewellery Group Limited retails jewelry.  The Company sells rings, necklaces, earrings, pendants, bracelets, and small statues.  Chow Tai Fook Jewellery operates retail stores in China, Hong Kong, Macau, Taiwan, Malaysia, and Singapore.

JB Hi-Fi Limited is a music and electronic goods retailer in Australia.  The Company operates stores at sites located in most Australian States.  Products include consumer electronics, car sound systems, music and DVDs.

ABC-MART, INC. plans, develops, wholesales, and retails shoes.  The Company also plans and develops brand name shoes such as VANS and G.T. HAWKINS.  ABC-Mart imports and wholesales shoes, apparel, bags, and sundries as well.

HIKARI TSUSHIN, INC. is a mobile telecommunication service subscription agency. The Company also operates telecommunication services stores, HIT SHOP, which sell cellular telephones, and related goods.  Hikari Tsushin also sells office automation equipment and insurance.

L'Occitane International S.A. is a global, natural and organic ingredient based cosmetics and well-being products enterprise.  The Company designs, manufactures and markets a wide range of cosmetics and well-being products based on natural and organic ingredients sourced principally from or near Provence.

Sanrio Company, Ltd. manufactures and sells character goods including gift merchandise, greeting cards, and stationery products.  The Company also produces books, magazines, and movies, and though its subsidiary, operates restaurants and amusement parks.

O'Reilly Automotive, Inc. retails and supplies automotive aftermarket parts, tools, supplies, equipment, and accessories.  The Company sells its products to do-it-yourself customers and professional mechanics or service technicians. O'Reilly operates stores throughout the United States.

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O'Reilly Automotive (ORLY US)

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

U.S. Equity Strategy: Has “the Pullback” Begun?

The weight of the evidence suggests that the pullback has begun. This belief is supported by overbought conditions combined with the S&P 500,...

Vermilion Research

U.S. Equity Strategy: Retest of October Lows Underway; Upgrading Financials

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several...

Vermilion Research

S&P 500: A Pause in the Uptrend - More Consolidation Expected.

In last week’s Compass we noted the S&P 500 was near the top end of the uptrend channel and that the index could fall 2.75%-3.25% before we get...

Vermilion Research

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