Vermilion Compass: Weekly Equity Strategy
Another Bear Market Rally Brewing?In last week's Compass (Sept. 27) we discussed our belief that the market indexes could see a bounce or pause in selling, citing numerous oversold indexes/Sectors that were testing critical supports, including 3636 on the S&P 500, $269 on the Nasdaq 100 (QQQ), and $162 on the Russell 2000 (IWM). Sector and index supports held, and early indications suggest a bear market rally is brewing, and potentially that the lows are in for this bear market, helped by short-term bearish engulfing patterns on the U.S. dollar (DXY) and 10-year Treasury yield last Wednesday. Assuming a new rally is underway, we would expect it to last 1-2 months before another test of the lows. As discussed below, 3636 and 3590 (200-week MA) are critical supports to watch on the S&P 500 moving forward.
Short-Term Tops for U.S. Dollar (DXY) and 10-Yr Treasury Yield. As initially discussed in last week's Int'l Compass (Sept. 29), the 10-year Treasury yield and DXY both formed bearish engulfing patterns on Wednesday last week, and have only moved lower since. While it is far too early to declare major topping patterns on the 10-year Treasury yield and the DXY, at the very least, this could set the stage for a near-term top in yields and the DXY, which would help fuel a short-term/bear market rally in the broad market indexes, with the potential for more... see charts below.
S&P 500 Holding at 200-Week MA. S&P 500 supports highlighted last week included the prior YTD lows at 3636 followed by the 200-week moving average at 3590, and also 3393-3400 (pre-COVID highs). Both the 3636 and 3590 levels have provided support and they continue to be critical support levels moving forward; if 3590 fails to hold, we see 3393-3400 as the likely next stop... see page 3.
ARKK, Bitcoin. Last week we discussed how Financials (XLF), Industrials (XLI), Technology (XLK), and equal-weighted Consumer Discretionary (RCD) were all testing multi-year support, some going all the way back to 2007 -- and all continue to hold above support. Other areas that have held above 5-year support levels include ARKK (above $35) and Bitcoin (above $18,500-$19k)... see page 3.
ADMA Biologics is a biopharmaceutical and immunoglobulin company that manufactures, markets and develops plasma-derived biologics for the treatment of immune deficiencies and the prevention and treatment of certain infectious diseases. The company's marketed products consist of: Nabi-HB, which is indicated for the treatment of acute exposure to blood containing Hepatitis B surface antigen; and Bivigam, which is indicated for the treatment of primary humoral immunodeficiency. The company is also developing a pipeline of plasma-derived therapeutics, including its key pipeline product candidate, RI-002, for the treatment of Primary Immune Deficiency Disease.
AECOM designs, builds, finances and operates infrastructure assets for governments, businesses and organizations. The company provides: planning, consulting, architectural and engineering design services to commercial and government clients in transportation, facilities, environmental, energy, water and government markets; construction services, including building construction and energy, infrastructure and industrial construction; as well as program and facilities management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services, for agencies of the United States government and for other national governments.
Agios Pharmaceuticals is a biopharmaceutical company focused on areas of hematologic malignancies, solid tumors and rare genetic diseases. The company's product, TIBSOVO? (ivosidenib) is for the treatment of adult patients with relapsed or refractory acute myeloid leukemia (R/R AML) with a susceptible isocitrate dehydrogenase (IDH) 1 mutation. The company's other product is IDHIFA? (enasidenib) for patients with R/R AML and an IDH2 mutation. The company's pre-commercial clinical cancer product candidates include: vorasidenib, a brain-penetrant pan-IDH mutant inhibitor; and AG-270, an orally available selective inhibitor of methionine adenosyltransferase 2a.
Akero Therapeutics is a clinical-stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious metabolic diseases. The company's initial focus is on nonalcoholic steatohepatitis ("NASH"), a disease without any approved therapies. NASH is a severe form of nonalcoholic fatty liver disease ("NAFLD"), characterized by inflammation and fibrosis in the liver that can progress to cirrhosis, failure, cancer of the liver, and death. The company is developing AKR-001, an analog of fibroblast growth factor 21 ("FGF21"), for NASH and plan to initiate a Phase 2a clinical trial for AKR-001 in NASH patients with fibrosis in the middle of 2019.
Dycom Industries is a provider of specialty contracting services. The company supplies telecommunications providers with a portfolio of specialty services, including program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, the company provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. The company supplies the labor, tools, and equipment necessary to provide these services to its customers.
EMCOR Group is an electrical and mechanical construction and facilities services firm. In addition, the company provides building services and industrial services. The company's services are provided to its customers through its operating subsidiaries and joint venture entities. The company engages in providing construction services relating to electrical and mechanical systems in various types of facilities and in providing various services relating to the operation, maintenance and management of facilities. The company also provides its construction services indirectly by acting as a subcontractor to general contractors, systems suppliers, construction managers, developers, property managers and other subcontractors.
Geron is a biopharmaceutical company that is focused on the development and commercialization of imetelstat, a therapeutic for hematologic myeloid malignancies. The company has global rights to imetelstat, a telomerase inhibitor, which was discovered and developed at the company Imetelstat has been granted both Orphan Drug and Fast Track designations by the United States Food and Drug Administration, for the treatment of patients with Low or Intermediate-1 risk myelodysplastic syndromes (MDS), or lower risk MDS, and for the treatment of patients with Intermediate-2 or High-risk MF relapsed after or refractory to janus kinase inhibitor treatment, or relapsed/refractory myelofibrosis.
PTC Therapeutics is a biopharmaceutical company focused on the discovery, development and commercialization of clinically-differentiated medicines that provide benefits to patients with rare disorders. The company has the following products, Translarna? (ataluren) and Emflaza? (deflazacort), for the treatment of Duchenne muscular dystrophy, a rare, life threatening disorder. The company's gene therapy product candidates for rare monogenic diseases that affect the central nervous system (CNS) include PTC-AADC for the treatment of Aromatic L-Amino Acid Decarboxylase (AADC) deficiency, a rare CNS disorder arising from reductions in the enzyme AADC that results from mutations in the dopa decarboxylase gene.
Revance Therapeutics is a clinical-stage biotechnology company focused on the development, manufacturing and commercialization of neuromodulators for multiple aesthetic and therapeutic indications. The company focuses on developing daxibotulinumtoxinA, its purified botulinum toxin Type A, for a spectrum of aesthetic and therapeutic indications, including facial wrinkles, muscle disorders, and chronic migraine. The company's main drug candidate is DaxibotulinumtoxinA for Injection. The company also is developing a topically applied neuromodulator for aesthetic and therapeutic indications, DaxibotulinumtoxinA Topical, and have a collaboration and license agreement to develop and commercialize a biosimilar to BOTOX?.
Sage Therapeutics is a clinical-stage biopharmaceutical company focused on developing and commercializing medicines to treat life-altering central nervous system disorders. The company's principal product candidate is ZULRESSO? (brexanolone) injection, a proprietary intravenous formulation of brexanolone for the treatment of postpartum depression (PPD). The company's other product candidate is SAGE-217, an oral compound that is being developed for PPD and major depressive disorder. The company also has a portfolio of other compounds that target GABAA receptors, which include SAGE-324 and SAGE-689. The company's second area of focus is the development of compounds that target the NMDA receptor, which include SAGE-718.
Seres Therapeutics is a microbiome therapeutics platform company developing a class of biological drugs, which it refers to as Ecobiotic? microbiome therapeutics. SER-287 is being developed to treat ulcerative colitis, or UC. SER-109 is designed to reduce recurrences of Clostridium difficile infection, or CDI, a debilitating infection of the colon, in patients who have received antibiotic therapy for recurrent CDI by treating the dysbiosis of the colonic microbiome. In addition, using its microbiome therapeutics platform, the company is developing product candidates to treat diseases including SER-301, a rationally designed, fermented UC candidate, and SER-401, a microbiome therapeutic candidate.
Syndax Pharmaceuticals is a clinical-stage biopharmaceutical company developing a pipeline of cancer therapies. The company's primary product candidate, entinostat is a once-weekly, oral, small molecule, Class I HDAC inhibitor, which is being evaluated in the Phase 3 E2112 registrational clinical trial in combination with exemestane for hormone receptor positive, human epidermal growth factor receptor 2 negative, breast cancer, an indication for which entinostat has been granted therapy designation from the United States Food and Drug Administration. SNDX-5613, the company's clinical-stage product candidate, is a small molecule inhibitor of the interaction of menin with the mixed lineage leukemia protein.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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