Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>During the week ended June 16, 2023, the WTR Sustainable Index outperformed the broader market, rising 5.9% W/W versus the S&amp;P 500 Index (up 2.6%), the Russell 2000 Index (up 0.5%), and the Nasdaq Composite Index (up 3.2%).</li><li>Advanced Transportation Solutions (74.4% of the index) drove the index’s performance, rising 7.0%, while Energy Technology (6.8% of the index) was up 5.3% and Industrial Climate and Ag Technology was up 2.0%.</li><li>Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.2x versus 20.5x for the S&amp;P 500.</li></ul>

During the week ended June 16, 2023, the WTR Sustainable Index outperformed the broader market, rising 5.9% W/W versus the S&amp;P 500 Index (up 2.6%), the Russell 2000 Index (up 0.5%), and the Nasdaq Composite Index (up 3.2%).Advanced Transportation Solutions (74.4% of the index) drove the index’s performance, rising 7.0%, while Energy Technology (6.8% of the index) was up 5.3% and Industrial Climate and Ag Technology was up 2.0%.Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.2x versus 20.5x for the S&amp;P 500.

Weekly Sustainable Investing Surveyor : Week Ended June 16, 2023

High Quality Stock Setups, Weekly Stock Bull Finder

Weekly Stock Bull Finder

High Quality Stock Setups

Finding high potential stock setups on quality companies

<ul>
<li>The ITB US Home Construction ETF is now up 33% YTD and represents one of the biggest market surprises for me so far in 2023.</li>
<li>This group has flashed relative strength vs. the S&amp;P 500 since December 2022 and continues to one of the top performing groups.</li>
<li>After undergoing correction in 2022, the homebuilders sector has tons of weekly charts breaking out of long and healthy weekly bases in strong uptrends</li>
</ul>


The ITB US Home Construction ETF is now up 33% YTD and represents one of the biggest market surprises for me so far in 2023.
This group has flashed relative strength vs. the S&amp;P 500 since December 2022 and continues to one of the top performing groups.
After undergoing correction in 2022, the homebuilders sector has tons of weekly charts breaking out of long and healthy weekly bases in strong uptrends


<ul>
<li>WTR Sustainable Index: During the week ended June 9, 2023, the WTR Sustainable Index outperformed the broader market, rising 9.7% W/W versus the S&amp;P 500 Index (up 0.4%), the Russell 2000 Index (up 1.9%), and the Nasdaq Composite Index (up 0.1%).</li>
<li>Advanced Transportation Solutions (73.6% of the index) drove the index’s performance, rising 12.8%, while Energy Technology (6.8% of the index) was up 2.1% and Industrial Climate and Ag Technology was up 2.5%.</li>
<li>Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.0x versus 20.0x for the S&amp;P 500.</li>
</ul>


WTR Sustainable Index: During the week ended June 9, 2023, the WTR Sustainable Index outperformed the broader market, rising 9.7% W/W versus the S&amp;P 500 Index (up 0.4%), the Russell 2000 Index (up 1.9%), and the Nasdaq Composite Index (up 0.1%).
Advanced Transportation Solutions (73.6% of the index) drove the index’s performance, rising 12.8%, while Energy Technology (6.8% of the index) was up 2.1% and Industrial Climate and Ag Technology was up 2.5%.
Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.0x versus 20.0x for the S&amp;P 500.


Weekly Sustainable Investing Surveyor : Week Ended June 9, 2023

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

iShares Russell 2000 ETF / Technical Analysis

<ul>
<li>The S&amp;P 500 broke above 4200 and the 2-month megaphone pattern on Friday, and is already approaching the 4300-4325 area which we have anticipated would cap upside for 2023.</li>
<li>While we would be cautious at these levels given our expectation for inflation to remain elevated, we cannot get too bearish if the S&amp;P 500 is above 4165-4200.</li>
<li>Breadth remains weak within the S&amp;P 500, but we are starting to see breadth improvement within small-cap Russell 2000 (IWM). More on that below, IWM targets include $190 and $200-202.</li>
</ul>


The S&amp;P 500 broke above 4200 and the 2-month megaphone pattern on Friday, and is already approaching the 4300-4325 area which we have anticipated would cap upside for 2023.
While we would be cautious at these levels given our expectation for inflation to remain elevated, we cannot get too bearish if the S&amp;P 500 is above 4165-4200.
Breadth remains weak within the S&amp;P 500, but we are starting to see breadth improvement within small-cap Russell 2000 (IWM). More on that below, IWM targets include $190 and $200-202.


Russell 2000 Breakout Attempt Underway; Small-Cap Breadth Improving; KRE, KBE, XRT Test Key Levels

NASDAQ Composite Index / Technical Analysis

<ul>
<li>Since January 2023 we've anticipated for 4165-4200 to cap upside on the S&amp;P 500 for 2023, but that a rally to 4300-4325 is also possible; this remains our view.</li>
<li>In our 5/2/23 Compass we discussed how the Nasdaq Composite was testing 12,300 resistance, and that a breakout and reach to 13,180 is possible.</li>
<li>The Nasdaq Composite hit 13,154 Tuesday as Technology (XLK), and to a lesser extent Communications (XLC), are seemingly in a blowoff stage, while all other Sectors are neutral to bearish.</li>
</ul>


Since January 2023 we've anticipated for 4165-4200 to cap upside on the S&amp;P 500 for 2023, but that a rally to 4300-4325 is also possible; this remains our view.
In our 5/2/23 Compass we discussed how the Nasdaq Composite was testing 12,300 resistance, and that a breakout and reach to 13,180 is possible.
The Nasdaq Composite hit 13,154 Tuesday as Technology (XLK), and to a lesser extent Communications (XLC), are seemingly in a blowoff stage, while all other Sectors are neutral to bearish.


Downgrading Discretionary & Health Care to Market Weight, Staples & Utilities to Underweight

United States

The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The index was developed with a base value of 135.00 as of December 31, 1986.

Russell 2000 Index (RTY INDEX)

Weekly Sustainable Investing Surveyor : Week Ended June 16, 2023

Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.2x versus 20.5x for the S&P 500.

Water Tower Research

Weekly Stock Bullfinder - Week of 6/19

The ITB US Home Construction ETF is now up 33% YTD and represents one of the biggest market surprises for me so far in 2023.

Weekly Stock Bull Finder

Weekly Sustainable Investing Surveyor : Week Ended June 9, 2023

Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.0x versus 20.0x for the S&P 500.

Water Tower Research

Russell 2000 Breakout Attempt Underway; Small-Cap Breadth Improving; KRE, KBE, XRT Test Key Levels

Breadth remains weak within the $SPX, but we're seeing breadth improve within the small-cap Russell 2000 $IWM. All this points to a breakout above...

Vermilion Research

Downgrading Discretionary & Health Care to Market Weight, Staples & Utilities to Underweight

5/2/23 we discussed how $Nasdaq Comp was testing 12,300 resistance, and that a breakout and reach to 13,180 was possible. It hit 13,154 Tuesday as...

Vermilion Research