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

<p>mportant price support levels previously highlighted have held strong, including the 3200-3230 level on the S&amp;P 500, 10,855 on the Nasdaq 100, and $145/the 200-day MA on the Russell 2000 (IWM). Additionally, both the S&amp;P 500 and Nasdaq 100 are breaking out from their bullish falling wedge patterns that have been taking shape since the early-September highs. These bullish inflections are encouraging and, combined with market dynamics which remain mostly healthy, lead us to believe the lows of this recent correction are likely in.  In today’s report we highlight attractive Groups and stocks within Consumer Discretionary &amp; Technology: Casinos &amp; Gaming, Small-Cap, Solar Energy, Fuel Cells/Lithium Batteries, and Software, Customer Relationship Mgt.</p>

mportant price support levels previously highlighted have held strong, including the 3200-3230 level on the S&amp;P 500, 10,855 on the Nasdaq 100, and $145/the 200-day MA on the Russell 2000 (IWM). Additionally, both the S&amp;P 500 and Nasdaq 100 are breaking out from their bullish falling wedge patterns that have been taking shape since the early-September highs. These bullish inflections are encouraging and, combined with market dynamics which remain mostly healthy, lead us to believe the lows of this recent correction are likely in.  In today’s report we highlight attractive Groups and stocks within Consumer Discretionary &amp; Technology: Casinos &amp; Gaming, Small-Cap, Solar Energy, Fuel Cells/Lithium Batteries, and Software, Customer Relationship Mgt.

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

<div>Trade higher from SPX 3,220 is meeting SPX 3,350 and NDX 11,400 targets. We are entering a more vulnerable cycle after September 29 but realize we may see month end window dressing that could stretch into later this week.</div><div></div><div>Cycle timeline: September 29 to October 19 a more negative period with risk into early November.</div><div></div><div>Weekly cycle exhibits a more fragile bounce and fade sequence.</div><div></div><div>Europe and Asia show more bearish pattern set ups on a bounce into month end and the favored spaces to build short exposure. USD bias is for a dip and rally that will pressure Asia and EM's leaving the US in a good position to perform.</div>

Trade higher from SPX 3,220 is meeting SPX 3,350 and NDX 11,400 targets. We are entering a more vulnerable cycle after September 29 but realize we may see month end window dressing that could stretch into later this week.Cycle timeline: September 29 to October 19 a more negative period with risk into early November.Weekly cycle exhibits a more fragile bounce and fade sequence.Europe and Asia show more bearish pattern set ups on a bounce into month end and the favored spaces to build short exposure. USD bias is for a dip and rally that will pressure Asia and EM's leaving the US in a good position to perform.

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

<p><em><strong>There is no global "second wave" of Covid, but the Schiller CAPE ratio is at levels it has rarely exceeded in the past 150 years, while the "Buffett Indicator" of market-cap to GDP is at an all-time high of 1.78x. Both valuation measures suggest the equity market is ripe for a significant sell-off, aided by the growing uncertainty surrounding the US election. </strong></em></p><p>The global market sell-off this month (especially since 16 September) has been attributed to a "Second Wave" of new Covid cases, but this simply reflects the over-representation of Britons (and British newspapers) in the global business media. There is an undoubted second wave in the UK and France, but no discernible second wave globally. Among the 10 worst-hit countries globally, #8 Spain has had a second wave that isn't quite over, and Russia has a mild second wave that is barely at half its mid-May peak. But the top-3 Covid-hit countries (the US, India, Brazil) are past their peaks, with Brazil and the US now well below their end-July peak in new cases.   </p><p>The sell-off in equity markets, however, owes primarily to the sell signal from two of the best long-term measures of equity value -- the Schiller CAPE (cyclically adjusted P/E ratio) and Buffett's favourite indicator, market-cap to GDP.  The CAPE has rarely been above 30 in the past 150 years -- but it was above that level at the end of August 2020 (and also at end-February 2020). The equity market invariably sells off when valuations are this rich. Similarly, the US market capitalization to GDP ratio is now at an all-time high of 1.78x -- and this is the reddest of red flags, suggesting the market is ripe for a sell-off. </p><p>Given the uncertainties over the US election, and particularly the fact that the likely winner of the US election (Joe Biden) is poised to raise the corporate tax rate to 28% (and to 30.8% for any corporate that outsources any manufacturing or services outside the US), US corporates' post-tax earnings will suffer. Consequently, we recommend that investors should Underweight Equities in the runup to the US presidential election.   </p>

There is no global "second wave" of Covid, but the Schiller CAPE ratio is at levels it has rarely exceeded in the past 150 years, while the "Buffett Indicator" of market-cap to GDP is at an all-time high of 1.78x. Both valuation measures suggest the equity market is ripe for a significant sell-off, aided by the growing uncertainty surrounding the US election. The global market sell-off this month (especially since 16 September) has been attributed to a "Second Wave" of new Covid cases, but this simply reflects the over-representation of Britons (and British newspapers) in the global business media. There is an undoubted second wave in the UK and France, but no discernible second wave globally. Among the 10 worst-hit countries globally, #8 Spain has had a second wave that isn't quite over, and Russia has a mild second wave that is barely at half its mid-May peak. But the top-3 Covid-hit countries (the US, India, Brazil) are past their peaks, with Brazil and the US now well below their end-July peak in new cases.   The sell-off in equity markets, however, owes primarily to the sell signal from two of the best long-term measures of equity value -- the Schiller CAPE (cyclically adjusted P/E ratio) and Buffett's favourite indicator, market-cap to GDP.  The CAPE has rarely been above 30 in the past 150 years -- but it was above that level at the end of August 2020 (and also at end-February 2020). The equity market invariably sells off when valuations are this rich. Similarly, the US market capitalization to GDP ratio is now at an all-time high of 1.78x -- and this is the reddest of red flags, suggesting the market is ripe for a sell-off. Given the uncertainties over the US election, and particularly the fact that the likely winner of the US election (Joe Biden) is poised to raise the corporate tax rate to 28% (and to 30.8% for any corporate that outsources any manufacturing or services outside the US), US corporates' post-tax earnings will suffer. Consequently, we recommend that investors should Underweight Equities in the runup to the US presidential election.   

There's No Global "Second Wave" Of Covid, but Long-Term Valuations Are Very Elevated

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Macroeconomics

<p>The Federal Open Market Committee (FOMC) embraced enhanced forward guidance last week by committing the federal funds rate to remain at zero until 2023 Q4 due to downside risks to their economic outlook. Monetary conditions will, therefore, remain stimulative for a protracted period, thereby potentially imparting risks if the economic recovery surprises to the upside.</p><div>The FOMC have upwardly revised their near-term growth outlook for the economy, while unemployment is eventually expected to decline to its natural rate by 2023 Q4 along with inflation reaching its 2% target. Downside risks still dominate the mindset of FOMC members, analogous to what prevailed after the financial crisis, even though there were no serious economic imbalances entering the Great Lockdown.</div><div></div><div>Downside risks to the medium-term economic outlook will be determined by the success in curbing the continued spread of COVID-19 and further fiscal policy support from federal government. The FOMC will not tighten policy before unemployment reaches its natural rate in a major departure from previous conduct.</div><div></div><div>The Fed's prospective policy outlook should be positive for US equities, particularly if the Fed can succeed in preventing the onset of significantly higher bond yields. The recent euphoria about e-commerce due to COVID-19 has taken information technology-related bullish sentiment back to levels akin to the late-1990s.</div><div></div><div>Historically, company dominance in US equity sectors has been ever-changing as smaller companies drive business and technological change, but the current market leaders are not new entities. Bullish investors have been seduced into the idea that a decade of profound technological innovations are pending, but the recent slowing of US patent applications would suggest otherwise.</div>

The Federal Open Market Committee (FOMC) embraced enhanced forward guidance last week by committing the federal funds rate to remain at zero until 2023 Q4 due to downside risks to their economic outlook. Monetary conditions will, therefore, remain stimulative for a protracted period, thereby potentially imparting risks if the economic recovery surprises to the upside.The FOMC have upwardly revised their near-term growth outlook for the economy, while unemployment is eventually expected to decline to its natural rate by 2023 Q4 along with inflation reaching its 2% target. Downside risks still dominate the mindset of FOMC members, analogous to what prevailed after the financial crisis, even though there were no serious economic imbalances entering the Great Lockdown.Downside risks to the medium-term economic outlook will be determined by the success in curbing the continued spread of COVID-19 and further fiscal policy support from federal government. The FOMC will not tighten policy before unemployment reaches its natural rate in a major departure from previous conduct.The Fed's prospective policy outlook should be positive for US equities, particularly if the Fed can succeed in preventing the onset of significantly higher bond yields. The recent euphoria about e-commerce due to COVID-19 has taken information technology-related bullish sentiment back to levels akin to the late-1990s.Historically, company dominance in US equity sectors has been ever-changing as smaller companies drive business and technological change, but the current market leaders are not new entities. Bullish investors have been seduced into the idea that a decade of profound technological innovations are pending, but the recent slowing of US patent applications would suggest otherwise.

Paranoid Fed: Wary of Downside Economic Risks and Gambles on Limited Positive Surprises by 2023

<p>Given high conviction bear pattern breakdowns in Europe and Asia, we are assuming the US cycle has more downside per our cycle timeline toward October 19. Core shorts are in SPX and RTY. DJI is a fresh underperform and short candidate on a bounce.</p><p>Europe's impulsive break down out of bear triangulation patterns is in line with our short call from Eurostoxx 50 3,400. Euro banks leading the route with the periphery in pursuit.</p><p>In Asia, we were short for breakdowns in Korea, Taiwan and HK. Japan is just starting to see the macro cycle peak and turn south. Singapore, Malaysia have been high conviction shorts and now we are seeing the stronger horses break down.</p><p>Fresh sell levels are outlined in Asia with primary downside targets.</p>

Given high conviction bear pattern breakdowns in Europe and Asia, we are assuming the US cycle has more downside per our cycle timeline toward October 19. Core shorts are in SPX and RTY. DJI is a fresh underperform and short candidate on a bounce.Europe's impulsive break down out of bear triangulation patterns is in line with our short call from Eurostoxx 50 3,400. Euro banks leading the route with the periphery in pursuit.In Asia, we were short for breakdowns in Korea, Taiwan and HK. Japan is just starting to see the macro cycle peak and turn south. Singapore, Malaysia have been high conviction shorts and now we are seeing the stronger horses break down.Fresh sell levels are outlined in Asia with primary downside targets.

US Downside Targets with European and Asia Breakdowns

United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

U.S. Equity Strategy: Correction Over?

In today’s report we highlight attractive Groups and stocks within Consumer Discretionary & Technology: CD-24 Casinos & Gaming, Small-Cap,...

Vermilion Research

SPX and NDX Trade Levels

Trade higher from SPX 3,220 is meeting SPX 3,350 and NDX 11,400 targets. We are entering a more vulnerable cycle after September 29 but realize we...

Thomas Schroeder

There's No Global "Second Wave" Of Covid, but Long-Term Valuations Are Very Elevated

The

Prasenjit K. Basu

Paranoid Fed: Wary of Downside Economic Risks and Gambles on Limited Positive Surprises by 2023

The Federal Open Market Committee (FOMC) embraced enhanced forward guidance last week by committing the federal funds rate to remain at zero until...

DeSaque Macro Research

US Downside Targets with European and Asia Breakdowns

Given high conviction bear pattern breakdowns in Europe and Asia, we are assuming the US cycle has more downside per our cycle. Core shorts are in...

Thomas Schroeder