Report
Dave Nicoski ...
  • Ross LaDuke
EUR 48.72 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Signs of Disinflation?

A bear market bounce is underway after the S&P 500, Nasdaq 100 (QQQ), and Russell 2000 (IWM) found support at their respective downtrend channels, a possibility we discussed last week. Still, until the S&P 500, QQQ, and IWM can break above their various downtrends, we remain bearish, and believe investors should be using rallies to reduce overall exposure.

Signs of Disinflation? We are starting to see early signs that inflation is peaking, as commodity prices have pulled back substantially or are breaking down, and the Energy and Materials Sectors are under significant pressure. Energy commodities (ETF: DBE) are breaking a 7-month uptrend while agricultural commodities (DBA) and base metals (DBB) display major topping patterns. Used car prices have also started to deteriorate. If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a multi-month bottoming process. Still, in order to have confidence that the factors that caused this bear market are starting to reverse, we need to see commodity prices continue to fall, and see a top in the US dollar and 10-year Treasury yield... see charts below and page 3.
S&P 500, Nasdaq 100, Russell 2000. This 1-week rally has the Nasdaq 100 (QQQ) testing resistance at its falling wedge pattern; a break above $297 would likely mean this bear market bounce has another 2-4 weeks of upside to go. The S&P 500 and Russell 2000 (IWM) are each about 5% below logical resistance at their falling wedge patterns. 4165-4170 remains a significant resistance level to watch on the S&P 500... see page 4.
Big Picture Trends. China Internet (KWEB) is finally breaking above $33 resistance, a positive for global risk sentiment -- accumulate. Biotech (XBI) is now above its recent high of $74.67 from early June, providing early signs of a potential bottom. ARK Innovation (ARKK) is testing short-term resistance at $47; a break above this level would signal a more meaningful bear market bounce for growth/technology. Speaking of Technology, we have the Sector on watch for a potential upgrade to market weight; RS shows early signs of bottoming on the equal-weighted Sector (RYT), while RS on the XLK has not made new lows since April, and is on the cusp of a bullish reversal topside the YTD downtrend... see page 5.
Underlyings
AbbVie Inc.

AbbVie is a research-based biopharmaceutical company. The company's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus and human immunodeficiency virus; neurological disorders, such as Parkinson's disease; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; pain associated with endometriosis; as well as other serious health conditions. The company also has medicines in clinical development across immunology, oncology and neuroscience, with additional targeted investment in cystic fibrosis and women's health.

Aerie Pharmaceuticals Inc.

Aerie Pharmaceuticals is an ophthalmic pharmaceutical company focused on the discovery, development and commercialization of therapies for the treatment of open-angle glaucoma and other diseases of the eye. The company has an approved product, Rhopressa? and advanced-stage product candidate, Roclatan?, which both are designed to reduce elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. The company is also developing two preclinical sustained-release implants focused on retinal diseases, which include AR-13503 for the treatment of wet age-related macular degeneration and related diseases of the retina; and AR-1105, a preclinical dexamethasone steroid implant.

AMGEN INC

Amgen is a biotechnology company that discovers, develops, manufactures and delivers human therapeutics. The company's products include: Enbrel? (etanercept), which is used in indications for the treatment of adult patients with moderately to severely active rheumatoid arthritis, patients with chronic moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy and patients with active psoriatic arthritis; and Prolia? (denosumab), which is used for the treatment of postmenopausal women with osteoporosis at high risk of fracture or multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy.

AstraZeneca PLC ADS

Biogen Inc.

Biogen is a biopharmaceutical company focused on discovering, developing and delivering therapies for people living with neurological and neurodegenerative diseases as well as related therapeutic adjacencies. The company's main growth areas include multiple sclerosis (MS) and neuroimmunology; Alzheimer's disease and dementia; neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis; movement disorders, including Parkinson's disease; and ophthalmology. The company's marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, VUMERITY and FAMPYRA for the treatment of MS, SPINRAZA for the treatment of SMA and FUMADERM for the treatment of severe plaque psoriasis.

Bristol-Myers Squibb Company

Bristol-Myers Squibb is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products. The company's products are sold worldwide, primarily to wholesalers, specialty distributors, retail pharmacies, hospitals, government entities and the medical profession. The company manufactures products in the United States and Puerto Rico and has manufacturing operations in two foreign countries. The company has products in the following therapeutic classes: hematology, oncology, cardiovascular and immunology. The company's pharmaceutical products include chemically-synthesized or small molecule drugs and products produced from biological processes, called biologics.

Catalyst Pharmaceuticals

Catalyst Pharmaceuticals is a biopharmaceutical company focused on developing and commercializing therapies for people with rare, debilitating, chronic neuromuscular and neurological diseases. The company has licensed the North American rights to Firdapse?, a proprietary form of amifampridine phosphate, or chemically known as 3,4-diaminopyridine phosphate, from BioMarin Pharmaceutical Inc. for the treatment of patients with Lambert-Eaton Myasthenic Syndrome, Congenital Myasthenic Syndromes and Myasthenia Gravis. In addition, the company has launched Firdapse? in the United States, selling through a field force in neurologic, central nervous system or rare disease products consisting of field personnel.

Corcept Therapeutics Incorporated.

Corcept Therapeutics is a commercial-stage company engaged in the discovery and development of medications that treat severe metabolic, oncologic and psychiatric disorders by modulating the effect of the hormone cortisol. The U.S. Food and Drug Administration has approved Korlym? 300 mg tablets, as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing's syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery. The company has discovered and patented four structurally series of selective cortisol modulators, consisting a variety of compounds.

Eli Lilly and Company

Eli Lilly and Company discovers, develops, manufactures, and markets products in a single business segment: human pharmaceutical products. The company's human pharmaceutical products include: diabetes and other endocrinology products, immunology products, neuroscience products, oncology products, and other products. The company's diabetes and other endocrinology products include: Baqsimi? and Basaglar?. The company's immunology products include: Olumiant? and Taltz?. The company's neuroscience products include: Cymbalta? and Emgality?. The company's oncology products include: Alimta?, Cyramza?, Erbitux? and Verzenio?. The company's other products include: Cialis?.

Evolus Inc

Evolus is a performance beauty company focused on delivering breakthrough products in the self-pay aesthetic market. The company's product, Jeuveau? (prabotulinumtoxinA-xvfs), is a 900 kDa purified botulinum toxin type A formulation indicated for the temporary improvement in the appearance of moderate to severe glabellar lines, also known as frown lines, in adults. The company's primary market is the self-pay aesthetic market, which includes medical products purchased by physicians that are then sold to consumers or used in procedures for aesthetic indications that are not reimbursed by any third-party payor, such as Medicaid, Medicare or commercial insurance.

GlaxoSmithKline PLC (ADR)

Incyte Corporation

Incyte is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutics. JAKAFI (ruxolitinib) has been approved for the treatment of patients with intermediate or high-risk myelofibrosis, for the treatment of patients with polycythemia vera, and for the treatment of steroid-refractory acute graft-versus-host disease in adult and pediatric patients 12 years and older. The company has also obtained a license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries. In the European Union, ICLUSIG is approved for the treatment of adult patients with chronic phase, accelerated phase or blast phase chronic myeloid leukemia.

Johnson & Johnson

Johnson & Johnson is a holding company engaged in the research and development, manufacture and sale of a range of products in the health care field. The company has three business segments: Consumer, which includes a range of products focused on personal healthcare used in the beauty, over-the-counter pharmaceutical, baby care, oral care, women's health and wound care markets; Pharmaceutical, which is focused on six therapeutic areas: immunology, infectious diseases, neuroscience, oncology, cardiovascular and metabolism and pulmonary hypertension; and Medical Devices, which includes products used in the orthopaedic, surgery, interventional solutions, and eye health fields.

Merck & Co. Inc.

Merck & Co. is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies and animal health products. The company's segments are: Pharmaceutical, which includes human health pharmaceutical products that consist of therapeutic and preventive agents for the treatment of human disorders, and human health vaccine products that consist of preventive pediatric, adolescent and adult vaccines; and Animal Health, which discovers, develops, manufactures and markets veterinary pharmaceuticals, vaccines and health management solutions and services, as well as a suite of digitally connected identification, traceability and monitoring products.

Novartis AG ADS

OptiNose

OptiNose is pharmaceutical company focused on the development and commercialization of products for patients treated by ear, nose and throat and allergy specialists. The company's first commercial product, XHANCE? (fluticasone propionate) nasal spray, 93 mcg, is a therapeutic utilizing its key Optinose Exhalation Delivery System (EDS) that delivers a topically-acting corticosteroid for the treatment of chronic rhinosinusitis with nasal polyps and, if approved, chronic rhinosinusitis without nasal polyps (chronic sinusitis). The company's other candidate includes OPN-300, which combines an Optinose EDS with oxytocin to target two orphan indications: Prader-Willi syndrome and autism spectrum disorder.

Pfizer Inc.

Pfizer is a research-based biopharmaceutical company. The company is engaged in discovering, developing, manufacturing and distributing of healthcare products, including medicines and vaccines. The company manages its commercial operations through three businesses: Pfizer Biopharmaceuticals Group, which includes Oncology, Inflammation and Immunology, Rare Disease, Hospital, Vaccines and Internal Medicine business units, as well as a hospital business unit; Upjohn, which includes the company's solid oral dose brands such as Lyrica, Lipitor, Norvasc, Celebrex, Viagra, and certain generic medicines; and Consumer Healthcare, which is an over-the-counter medicines business.

ProPhase Labs Inc

ProPhase Labs is engaged in the research, development, manufacture, distribution, marketing and sale of over-the-counter (OTC) consumer healthcare products, dietary supplements and other remedies, including the development and marketing of dietary supplements under the TK Supplements? brand. The company's subsidiary, Pharmaloz Manufacturing Inc., is a manufacturer and distributor of non-GMO, organic and/or natural-based cough drops and lozenges and OTC drug and dietary supplement products. The company's TK Supplements? product line includes Legendz XL?, a male sexual enhancement, Triple Edge XL?, an energy and stamina booster, and Super Prostaflow+?, a supplement to support prostate and urinary health.

Sanofi S.A. ADS

Vertex Pharmaceuticals Incorporated

Vertex Pharmaceuticals is focused on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and developing research and development programs in other indications. The company's marketed products are TRIKAFTA (elexacaftor/tezacaftor/ivacaftor and ivacaftor), SYMDEKO/SYMKEVI (tezacaftor in combination with ivacaftor), ORKAMBI (lumacaftor in combination with ivacaftor) and KALYDECO (ivacaftor), which are approved to treat patients with CF who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene. The company is evaluating CTX001, a genetic therapy as a potential treatment for sickle cell disease and beta-thalassemia.

Provider
Vermilion Research
Vermilion Research

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.

Analysts
Dave Nicoski

Ross LaDuke

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