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

MSCI Emerging Markets Index / Technical Analysis

<ul>
<li>In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. </li>
<li>The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).</li>
<li>The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).</li>
</ul>


In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. 
The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).
The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).


MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.</li>
<li>The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.</li>
<li>On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.</li>
</ul>


Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.


Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

<ul>
<li>Since our Long Apple vs. Short Quanta &amp; Pegatron piece, Apple has outperformed by 11.7% in USD-adjusted terms.</li>
<li>Apple has reported results recently, thus the next major events could be Quanta and Pegatron results.</li>
<li>Given Apple has outperformed by a significant amount, we believe the best of Apple's relative outperformance is done for the near-term. One can thus look for levels to unwind.</li>
</ul>


Since our Long Apple vs. Short Quanta &amp; Pegatron piece, Apple has outperformed by 11.7% in USD-adjusted terms.
Apple has reported results recently, thus the next major events could be Quanta and Pegatron results.
Given Apple has outperformed by a significant amount, we believe the best of Apple's relative outperformance is done for the near-term. One can thus look for levels to unwind.


Long Apple Vs. Short Quanta & Pegatron Update: Apple Outperformed 12%, Consider Unwind

<ul>
<li>Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.</li>
<li>Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.</li>
<li>We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.</li>
</ul>


Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.
Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.
We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.


Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.</li>
<li>Samsung has guided staff internally for a major slump in its semiconductor unit's operating profit.</li>
<li>Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.</li>
</ul>


TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.
Samsung has guided staff internally for a major slump in its semiconductor unit's operating profit.
Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.


Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers

Taiwan

Quanta Computer Inc. manufactures and markets notebook computers and related peripheral equipment.

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Quanta Computer (2382 TT)

MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Signs continue to point to a topping $DXY, and a declining DXY has historically resulted in EM outperformance (vs. $EAFE). Many ideas in China/Hong...

Vermilion Research

Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a...

Vincent Fernando, CFA

Long Apple Vs. Short Quanta & Pegatron Update: Apple Outperformed 12%, Consider Unwind

Apple has reported results recently and Quanta and Pegatron results should be next. However, Apple's best near-term outperformance may be past.

Vincent Fernando, CFA

Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

We see Quanta & Pegatron at risk of margin pressure in 2023E -- With negative operating leverage potentially causing significant profit declines.

Vincent Fernando, CFA

Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers

TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.

Vincent Fernando, CFA

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