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

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the market. Continued volatility remains our expectation, and it is becoming increasingly likely that the February 2018 lows will be tested, with new YTD lows a very real possibility.  In today’s report we reiterate our U.S. investment thesis, and highlight attractive Groups within Utilities and Financials.

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the market. Continued volatility remains our expectation, and it is becoming increasingly likely that the February 2018 lows will be tested, with new YTD lows a very real possibility.  In today’s report we reiterate our U.S. investment thesis, and highlight attractive Groups within Utilities and Financials.

U.S. Equity Strategy: How Much Worse Can It Get?

With major indexes testing support last week, we highlighted that while we expect to see indexes firm up based on YTD trends, the potential for breakdowns was not far off. In today’s report we assess the damage and highlight key support levels.  We also highlight attractive Groups  and stocks within the Materials, Utilities, and Consumer Staples Sectors.

With major indexes testing support last week, we highlighted that while we expect to see indexes firm up based on YTD trends, the potential for breakdowns was not far off. In today’s report we assess the damage and highlight key support levels.  We also highlight attractive Groups  and stocks within the Materials, Utilities, and Consumer Staples Sectors.

Key Support Levels Being Tested for U.S. Indexes

<ul>
<li>
We are downgrading Consumer Discretionary to market weight as retail breakdowns and continued weakness in homebuilders and major autos has led to price and RS uptrend violations for the Sector. Reduce exposure.</li>
<li>
Many major indexes testing support. We cover the S&amp;P 500, Dow, small-caps, PHLX Semiconductor, international developed and emerging markets, which are all at logical support areas. While we expect to see these indexes firm up at current levels based on YTD trends, the potential for breakdowns is not far off.</li>
<li>
Big picture trends. The cyclicals  vs. staples ratio remains elevated and has not broken down. Something similar can be said of the growth vs. value ratio, where the uptrend remains intact.</li>
<li>
In today’s report we highlight attractive Groups and stocks within Energy, Consumer Staples, Materials, and Utilities.</li>
</ul>



We are downgrading Consumer Discretionary to market weight as retail breakdowns and continued weakness in homebuilders and major autos has led to price and RS uptrend violations for the Sector. Reduce exposure.

Many major indexes testing support. We cover the S&amp;P 500, Dow, small-caps, PHLX Semiconductor, international developed and emerging markets, which are all at logical support areas. While we expect to see these indexes firm up at current levels based on YTD trends, the potential for breakdowns is not far off.

Big picture trends. The cyclicals  vs. staples ratio remains elevated and has not broken down. Something similar can be said of the growth vs. value ratio, where the uptrend remains intact.

In today’s report we highlight attractive Groups and stocks within Energy, Consumer Staples, Materials, and Utilities.


Yield Surge Tests Equities; Downgrading Discretionary

United States

Pinnacle West Capital Corporation is a utility holding company.  The Company, through its subsidiary, provides either retail or wholesale electric service to most of the State of Arizona. The Company, through a subsidiary, also is involved in real estate development activities in the western United States.

IDACORP, Inc is the holding company for Idaho Power Company, an electric utility and IDACORP Energy, an energy marketing company.  Idaho Power generates, purchases, transmits, distributes, and sells electric energy in southern Idaho, eastern Oregon, and northern Nevada.  IDACORP Energy maintains electricity and natural gas marketing operations.

Portland General Electric Company is an electric utility involved in the generation, purchase, transmission, distribution, and sale of electricity in Oregon.  The Company also participates in the wholesale market by purchasing and selling electricity and natural gas to utilities and energy marketers.

Portland General Electric Company (POR US)

Otter Tail Corporation, through its utility business units, provides electricity and energy services to customers in Minnesota, North Dakota, and South Dakota. The Company, through its Varistar Corporation unit, operates manufacturing, plastics, health services, construction, entertainment, telecommunications, and transportation businesses with customers across the United States and Canada.

ALLETE, Inc. provides energy services in the upper Midwest United States.  The Company generates, transmits, distributes, markets, and trades electrical power for retail and wholesale customers.

MGE Energy, Inc. is a public utility holding company.  The Company's principal subsidiary generates and distributes electricity to customers in Dane County, Wisconsin.  MGE also purchases, transports, and distributes natural gas in several Wisconsin counties.

PNM Resources Inc. is a holding company. The Company, through its subsidiaries, generates, transmits, and distributes electricity.

Hawaiian Electric Industries, Inc. is a diversified holding company that delivers a variety of services to the people of Hawaii.  The Company's subsidiaries offer electric utilities, savings banks and other businesses, primarily in the state of Hawaii.

Evergy, Inc. provides electricity generation, transmission, and distribution services. The Company offers its services in the United States.

Avangrid, Inc. operates as an energy services holding company. The Company engages in the regulated energy transmission and distribution business through wind and solar power, as well as natural gas utilities. Avangrid serves customers in the United States.

Manila Electric Company is an engineering, construction and consulting firm with expertise in the fields of power generation, transmission and distribution, telecommunications and installations. The Company also provides real estate services along with consulting and information technology.

Tokyo Electric Power Company, Incorporated generates, transmits, and distributes electricity.  The Company uses hydroelectric, thermal, and nuclear power sources.  Tokyo Electric Power distributes electricity in the Kanto area, which includes the Tokyo metro area, Kanagawa, Chiba, and Saitama prefectures.

SJVN Limited develops, owns, and operates Hydro-electric power projects in India. The Company operates power generating plants in states that include Himachal Pradesh,

Acciona S.A. is a global developer and service provider of solutions in renewable energy, large civil infrastructures and water treatment and reverse osmosis desalination.  The Company has sustainable development at the heart of its strategy.

Elia System Operator SA/NV operates the Belgian high-voltage grid, consisting of overhead lines, underground cables and other equipment necessary to enable the transmission of electricity such as transformers.

CPFL Energia S.A., through its subsidiaries, distributes, generates and commercializes electricity in Brazil.  The Company also commercializes electricity and provides electricity-related services to its affiliates as well as unaffiliated parties.

Equatorial Energia SA is a holding company that owns interests in power distribution operations throughout Brazil.

Transmissora Alianca de Energia Eletrica SA is a holding company for the energy sector. The Company, through its subsidiaries, operates and maintains the transmission of electric energy throughout Brazil.

Companhia Energetica de Minas Gerais- CEMIG generates, transmits, and distributes electricity in the Brazilian State of Minas Gerais.  Cemig serves industrial, commercial, residential, and rural customers.  The Company generates electricity primarily through hydroelectric plants.

Korea Electric Power Corporation (KEPCO) generates, transmits, and distributes electricity to South Korea for a variety of uses. The Company also builds and operates hydro-power, thermal-power, and nuclear power units in South Korea.

OGE Energy Corp., through its principal subsidiary Oklahoma Gas and Electric Company, generates, transmits, and distributes electricity to wholesale and retail customers in communities in Oklahoma and western Arkansas. The Company, through Enogex Inc., operates natural gas transmission and gathering pipelines, has interests in gas processing plants, and markets electricity.

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Oge Energy Corp (OGE US)

U.S. Equity Strategy: How Much Worse Can It Get?

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the...

Vermilion Research

Key Support Levels Being Tested for U.S. Indexes

With major indexes testing support last week, we highlighted that while we expect to see indexes firm up based on YTD trends, the potential for...

Vermilion Research

Yield Surge Tests Equities; Downgrading Discretionary

We are downgrading Consumer Discretionary to market weight as retail breakdowns and continued weakness in homebuilders and major autos has led to...

Vermilion Research

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