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>Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the S&amp;P 500.</li>
<li>We've been preaching caution with the indexes testing resistance, and we are now getting confirmation that suggests a pullback has officially begun</li>
<li>SPX, QQQ, and IWM all demonstrating false breakouts, alongside bullish inflections in Treasury yields, high yield spreads, and the U.S. dollar. Defensives also display bullish RS reversals</li>
</ul>


Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the S&amp;P 500.
We've been preaching caution with the indexes testing resistance, and we are now getting confirmation that suggests a pullback has officially begun
SPX, QQQ, and IWM all demonstrating false breakouts, alongside bullish inflections in Treasury yields, high yield spreads, and the U.S. dollar. Defensives also display bullish RS reversals


Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher

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>WTR Sustainable Index: During the week ended February 10, 2023, the WTR Sustainable Index outperformed the broader market, rising 0.2% W/W versus the S&amp;P 500 Index (down 1.1%), the Russell 2000 Index (down 3.4%), and the Nasdaq Composite Index (down 2.4%). Advanced Transportation Solutions (70% of the index) drove the outperformance, rising 1.7% , while Energy Technology (9% of index) was down 5.0% and Industrial Climate and Ag Technology was down 2.2%.</li><li>Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 24.5x versus 18.4x for the S&amp;P 500.</li><li>Consensus estimates changes: During the week ended February 10, 2023, there were five <span style="box-sizing: border-box; text-decoration: underline;">increases</span> (three in Energy Technology and two in Industrial Climate and Ag Technology) 2022 revenue estimates. There were <span style="box-sizing: border-box; text-decoration: underline;">decreases</span> in 2022 revenue estimates for two companies each in Advanced Transportation Solutions and Industrial Climate and Ag Technology.</li></ul>

WTR Sustainable Index: During the week ended February 10, 2023, the WTR Sustainable Index outperformed the broader market, rising 0.2% W/W versus the S&amp;P 500 Index (down 1.1%), the Russell 2000 Index (down 3.4%), and the Nasdaq Composite Index (down 2.4%). Advanced Transportation Solutions (70% of the index) drove the outperformance, rising 1.7% , while Energy Technology (9% of index) was down 5.0% and Industrial Climate and Ag Technology was down 2.2%.Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 24.5x versus 18.4x for the S&amp;P 500.Consensus estimates changes: During the week ended February 10, 2023, there were five increases (three in Energy Technology and two in Industrial Climate and Ag Technology) 2022 revenue estimates. There were decreases in 2022 revenue estimates for two companies each in Advanced Transportation Solutions and Industrial Climate and Ag Technology.

Weekly Sustainable Investing Surveyor: Week Ended February 10, 2023

US Treasury (10 Yr Generic) / Technical Analysis

<ul>
<li>We continue to expect the 4165-4200 level to cap upside on the S&amp;P 500, but cannot rule out a trip to 4300-4325 (August 2022 highs)</li>
<li>Either way, we continue to preach caution and believe that upside is limited on the market indexes.</li>
<li>Treasury yields are starting to reverse above multi-month downtrends, and we are monitoring for similar reversals on the U.S. dollar (DXY) and high yield spreads.</li>
</ul>


We continue to expect the 4165-4200 level to cap upside on the S&amp;P 500, but cannot rule out a trip to 4300-4325 (August 2022 highs)
Either way, we continue to preach caution and believe that upside is limited on the market indexes.
Treasury yields are starting to reverse above multi-month downtrends, and we are monitoring for similar reversals on the U.S. dollar (DXY) and high yield spreads.


Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?

<ul>
<li>We previously discussed our belief that equities were in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area on S&amp;P 500</li>
<li>And, as you will see below, countless other indexes and Sectors are testing important resistance levels. We continue to expect 4100-4165 on the S&amp;P 500 to cap upside</li>
<li>Buy ideas highlighted within defensives, including Consumer Staples, Health Care, and Communications: CMCSA, CHTR, UL, KHC, CAG, SJM, CPB, LLY, MRK, and NVO</li>
</ul>


We previously discussed our belief that equities were in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area on S&amp;P 500
And, as you will see below, countless other indexes and Sectors are testing important resistance levels. We continue to expect 4100-4165 on the S&amp;P 500 to cap upside
Buy ideas highlighted within defensives, including Consumer Staples, Health Care, and Communications: CMCSA, CHTR, UL, KHC, CAG, SJM, CPB, LLY, MRK, and NVO


Many Indexes/Sectors Testing Resistance; Limited Upside From Here; Buys in Staples and Health Care

<ul><li>WTR Sustainable Index: During the week ended January 27, 2023, the WTR Sustainable Index outperformed the broader market, rising 20.0% W/W versus the S&amp;P 500 Index (up 2.5%), the Russell 2000 Index (up 2.4%), and the Nasdaq Composite Index (up 4.3%).</li><li>Advanced Transportation Solutions (69% of the index) drove the outperformance, rising 30.7% , while Energy Technology (9% of index) was up 1.8% and Industrial Climate and Ag Technology was up 1.9%.</li><li>Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 26.4x versus 18.3x for the S&amp;P 500.</li></ul>

WTR Sustainable Index: During the week ended January 27, 2023, the WTR Sustainable Index outperformed the broader market, rising 20.0% W/W versus the S&amp;P 500 Index (up 2.5%), the Russell 2000 Index (up 2.4%), and the Nasdaq Composite Index (up 4.3%).Advanced Transportation Solutions (69% of the index) drove the outperformance, rising 30.7% , while Energy Technology (9% of index) was up 1.8% and Industrial Climate and Ag Technology was up 1.9%.Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 26.4x versus 18.3x for the S&amp;P 500.

Weekly Sustainable Investing Surveyor: Week Ended January 27, 2023

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)

Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher

Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the $SPX. We have been preaching caution, and we are...

Vermilion Research

Weekly Sustainable Investing Surveyor: Week Ended February 10, 2023

Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 24.5x versus 18.4x for the S&P 500.

Water Tower Research

Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?

We continue to expect 4165-4200 to cap upside on the S&P 500, but a trip to 4300-4325 is possible. We continue to preach caution. Treasury yields...

Vermilion Research

Many Indexes/Sectors Testing Resistance; Limited Upside From Here; Buys in Staples and Health Care

We continue to expect 4100-4165 on the $SPX to cap upside. Many other indexes and Sectors are also testing important resistance levels dating back...

Vermilion Research

Weekly Sustainable Investing Surveyor: Week Ended January 27, 2023

During the week ended January 27, 2023, the WTR Sustainable Index outperformed the broader market, rising 20.0% W/W versus the S&P 500 Index (up 2.5%)

Water Tower Research