Report
Dave Nicoski ...
  • Ross LaDuke
EUR 48.56 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

S&P 500 Coiled Spring

Our view remains bullish as long as the S&P 500 is above the 2940-2980 support zone and we suggest buying any dips. Additionally, 3076 is a short-term support level to watch on the S&P 500; if 3076 holds it would be further confirmation that the bulls are still in charge.

· What Would Alter Our Bullish Outlook? Key support levels we are watching include the 2940-2980 zone on the S&P 500, 9500 on the Nasdaq 100 (or $231.50 on the QQQ), and $133 on the Russell 2000 (IWM). A break below these support levels would be a bearish trend change, which would signal additional downside is likely and a more cautious outlook would be warranted. We remain positive as long as these support levels hold... see charts below and page 2.

· Sector Relative Strength Rankings & Weighting Recommendations. The stay-at-home and growth areas (Technology, Communications, biotech, ZM, PTON, TDOC, AMZN, etc.) outperformed for the second straight week at the expense of value Sectors. This puts growth squarely back in the driver's seat, reasserting its long-term leadership status. Actionable growth stocks highlighted include Microsoft (MSFT), Chipotle (CMG), Beyond Meat (BYND), and Netflix (NFLX). We are also monitoring Staples and Health Care closely; sustained outperformance would be a bad sign for the broad market... see pages 3-5.

· Cyclical Value Still Above Base Support. Outperformance and a rotation into small-caps and cyclical value Sectors such as Financials/banks, Industrials, and Transportation are hallmarks of durable market bottoms following major corrections. At the moment these Sectors only outperformed for one month (mid-May through mid-June), but one month still “checks the box” of what we need to see to have confidence in a bottom. For reference, these Sectors outperformed for anywhere between 1-4 months after the major bottoms in 2003, 2009, 2011, and 2016. As long as these Sectors do not hit new price or RS lows it will be a positive sign for the broad market..
Underlyings
Advanced Micro Devices Inc.

Advanced Micro Devices is a semiconductor company. The company primarily provides x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit, chipsets, graphics processing units (GPUs), data center and personnel GPUs, and development services; server and embedded processors, semi-custom System-on-Chip products, development services and technology for game consoles. The company also licenses portions of its intellectual property portfolio. The company's segments are: Computing and Graphics, which consists of desktop, notebooks, commercial, and chipsets products; and Enterprise, Embedded and Semi-Custom, which includes server processors, and embedded P\processors products.

Applied Materials Inc.

Applied Materials provides manufacturing equipment, services and software to the semiconductor, display and related industries. The company's segments are: Semiconductor Systems, which develops, manufactures and sells a range of manufacturing equipment used to fabricate semiconductor chips; Applied Global Services, which provides integrated solutions to support equipment and fab performance and productivity; and Display and Adjacent Markets, which is comprised of products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices.

ASML Holding N.V.

Avalara Inc

Avalara provides cloud-based solutions designed by automating the processes of determining taxability, identifying applicable tax rates, determining and collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. The company's products and solutions include: AvaTax for Tax Determination, which is a solution for determining sales tax; Avalara Compliance Document Management, which provides compliance document management solutions that are either integrated into AvaTax or that function as a standalone solution; and Professional Services, which include nexus studies and analysis, voluntary compliance initiatives, and tax research.

Bottomline Technologies (de) Inc.

Bottomline Technologies operates settlement networks that facilitate electronic payments and transaction settlement between businesses, their vendors and banks. The company provides solutions that banks use to provide payment, cash management and treasury capabilities to their business customers, as well as solutions that financial institutions use to facilitate customer acquisition. Corporate customers rely on the company's solutions to automate payment and accounts payable processes. The company also provides cyber fraud and risk management solutions that are designed to non-invasively monitor and analyze user behavior and payment transactions to flag behavioral and data anomalies and other suspicious activity.

Cardlytics Inc

Cardlytics is engaged in operating an advertising platform. The company has two reportable segments: Cardlytics Direct and Other Platform Solutions. Through Cardlytics Direct, marketers can deliver advertising content to financial institutions (FIs) customers in the form of an opportunity to earn rewards, which are funded with a portion of the fees the company collects from marketers. The company sells Cardlytics Direct in the United States and the United Kingdom. The company's Other Platform Solutions enabled marketers and marketing service providers to utilize the power of purchase intelligence outside the bank channel.

ChannelAdvisor Corp

ChannelAdvisor is a provider of software-as-a-service (SaaS) solutions. The primary products the company provides are: Marketplaces module, which connects customers to third-party marketplaces such as Amazon, eBay, Google, Newegg, Overstock.com, Rakuten, Target, TradeMe, Walmart and Zalando; and Digital Marketing module, which connects customers to comparison shopping websites such as Google Shopping and Shopzilla, allows customers to advertise products on search engines such as Google and Microsoft's Bing, connects customers to social commerce sites such as Facebook, Instagram and Pinterest and supports advertising programs on some marketplaces such as Amazon and eBay.

Digital Turbine

Digital Turbine, through its subsidiaries, delivers end-to-end platform solution for mobile operators, application developers, device original equipment manufacturers (OEMs), and other third parties. The company's advertising business is comprised of Operator and OEM, an advertiser solution for carrier and OEM inventory comprised of services including Ignite?, a software platform with targeted media delivery and management capabilities; and Other recurring and lifecycle products, features, and services delivered on the Ignite platform. The company has launched Ignite with mobile operators and OEMs in North America, Latin America, Europe, Asia Pacific, India and Israel.

Elastic N.V.

Elastic is a search company. The company's products enable its users and customers to instantly find relevant information and insights in large amounts of data. The company provides the Elastic Stack, a set of software products that ingest and store data from any source, and in any format, and perform search, analysis, and visualization in milliseconds or less. The Elastic Stack is designed for direct use by developers to power a variety of use cases. The company also provides software solutions built on the Elastic Stack that address a variety of use cases. The Elastic Stack and the company's solutions are designed to run on premises, in public or private clouds, or in hybrid environments.

KLA Corporation

KLA is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The company provides process control and process-enabling solutions for manufacturing and testing wafers and reticles, integrated circuits, packaging, light emitting diodes, power devices, compound semiconductor devices, microelectromechanical systems, data storage, printed circuit boards (PCBs), and flat and flexible panel displays, as well as general materials research. The company has four reportable segments which include Semiconductor Process Control; Specialty Semiconductor Process; PCB, Display and Component Inspection; and Other.

Lam Research Corporation

Lam Research is a supplier of wafer fabrication equipment and services to the semiconductor industry. The company designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company's customer base includes semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory, and logic devices. The company's services include customer service, spares, improvement, and refurbishment of its deposition, etch, and clean products. The company sells its products and services to companies in the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan.

Marvell Technology Group Ltd.

Marvell Technology Group is a semiconductor provider of application-specific products. The company is focused on the development of System-on-a-Chip devices, utilizing its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company develops integrated hardware platforms along with software that incorporates digital computing technologies. In storage, the company is engaged in fibre channel products and data storage controller solutions spanning cloud, enterprise, edge and personal computing markets. The company's networking products include ethernet solutions, embedded processors and WiFi connectivity solutions.

Microchip Technology Incorporated

Microchip Technology develops, manufactures and sells semiconductor products. The company's product portfolio comprises general purpose and other eight-bit, 16-bit, 32-bit microcontrollers, 32-bit microprocessors, field-programmable gate array products, a range of linear, mixed-signal, power management, thermal management, discrete diodes, Metal Oxide Semiconductor Field Effect Transistors, radio frequency, timing, timing systems, safety, security, wired connectivity and wireless connectivity devices, serial Electrically Erasable Programmable Read Only Memory, Serial Flash memories, Parallel Flash memories, Serial Electrically Erasable Random Access Memory and serial Static Random Access Memory.

MKS Instruments Inc.

MKS Instruments is a provider of instruments, subsystems and process control solutions. The company has two segments: Vacuum & Analysis, which provides instruments, components, subsystems and software which are derived from its knowledge in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control and information technology, ozone generation and delivery, radio frequency and data communication power, reactive gas generation and vacuum technology; and Light & Motion, which provides instruments, components and subsystems which are derived from its knowledge in lasers, photonics and optics.

Monolithic Power Systems Inc.

Monolithic Power Systems is a fabless semiconductor company. The company designs, develops and markets power solutions for systems found in consumer, computing and storage, automotive, industrial, communications and consumer applications. The company's primary product families include the following: Direct Current (DC) to DC products, which are used to convert and control voltages within a range of electronic systems such as portable electronic devices, wireless Local Area Network access points, computers, and monitors, automobiles and medical equipment; and Lighting Control Products, which include lighting control integrated circuits that are used in backlighting and general illumination products.

PFSweb Inc

PFSweb is a provider of omni-channel commerce solutions, including a range of technology, infrastructure and other services. The company's service offerings include website design, creation and integration, digital agency and marketing, eCommerce technologies, order management, customer care, logistics and fulfillment, financial management and consulting. The services the company provides are primarily organized into the following categories: Strategic Commerce Consulting Services; Design and Digital Marketing Services; Technology Services; Order to Cash; Fulfillment; and Customer Care.

PROS Holdings Inc.

PROS Holdings is a holding company. Through its subsidiaries, the company provides artificial intelligence solutions. The company's cloud-based software solutions provide companies with AI-based predictive and prescriptive guidance on key business decisions including product mix optimization, price forecasting, price optimization, product configuration recommendations, new sales opportunity recommendations, cross-sell recommendations and proactive attrition detection. The company's subscription services provide customers access to its software via the Internet. The company also provides other software-related services, including implementation and configuration services, consulting and training services.

Q2 HLDGS INC

Q2 Holdings is a holding company. Through its subsidiaries, the company provides cloud-based digital solutions. The company's digital banking platform provides digital banking services to their end users. The company's Q2 Cloud Lending, digital lending and leasing platform is a cloud-based, end-to-end lending and leasing solution that allows to automate and digitize their lending and leasing activities, supporting digital lending and leasing applications, scoring, underwriting, servicing and collections for various assets classes. The company's Q2 Open is a portfolio of open application programming interface financial services which are designed to develop and support their own applications and digital financial services.

Qorvo Inc.

Qorvo is a holding company. Through its subsidiaries, the company designs, develops, manufactures and markets its products to U.S. and international original equipment manufacturers and original design manufacturers in two operating segments: Mobile Products, which is a supplier of cellular radio frequency (RF) and Wi-Fi solutions for mobile devices, including smartphones, wearables, laptops, tablets and cellular-based applications for the Internet of Things (IoT); and Infrastructure and Defense Products, which is a supplier of RF and system-on-a-chip solutions for cellular base stations and other wireless communications infrastructure, defense, smart home, automotive and other IoT applications.

Skyworks Solutions Inc.

Skyworks Solutions is a provider of analog semiconductors that connect people, places, and things, spanning a number of applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets. The company's product portfolio consists of various solutions, including: amplifiers, antenna tuners, attenuators, circulators/isolators, wireless analog system on chip, direct current (DC)/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrid, light emitting diode drivers, low noise amplifiers, mixers, and modulators.

Splunk Inc.

Splunk provides software solutions that enable users to investigate, monitor, analyze and act on machine data. The company's main product is Splunk Enterprise, a machine data platform, comprised of collection, indexing, search, reporting, analysis, alerting, monitoring and data management capabilities. The company's Splunk Cloud delivers the capabilities of Splunk Enterprise as a service, while Splunk Light provides log search and analysis for information technology environments. The company also provides services that include maintenance and customer support, training services to its customers and channel partners, as well as consulting and implementation services to customers through its services team.

STMicroelectronics N.V. ADS

Teradyne Inc.

Teradyne is a global supplier of automation equipment for test and industrial applications. The company designs, develops, manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and electronics systems in the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. The company's automatic test equipment and industrial automation products and services include: semiconductor test systems; defense/aerospace test instrumentation and systems, storage test systems, and circuit-board test and inspection systems; industrial automation products; and wireless test systems.

Verisec AB

Verisec AB is a Sweden-based company which provides security solutions for banking, government and business customers.

Workiva

Workiva is a provider of cloud-based solutions for connected data, reporting and compliance. The company's platform, Wdesk provides controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. Wdesk enables the company's users to collect, aggregate and prepare their unstructured and structured data in a cloud-based environment. Numbers, narrative, charts and graphics can be linked inside Wdesk. The company's Wdesk platform enables customers to collect, link, manage, report and analyze business data for a range of use cases across public and private companies, government agencies and higher-education institutions.

Xilinx Inc.

Xilinx designs and develops programmable devices and associated technologies, including: integrated circuits (ICs) in the form of programmable logic devices (PLDs), including programmable System on Chips and three-dimensional ICs; Adaptive Compute Acceleration Platform, a multi-core heterogeneous compute platform; software design tools to program the PLDs; software development environments and embedded platforms; targeted reference designs; printed circuit boards; and intellectual property (IP), which consists of the company and third-party verification and IP cores. In addition to its programmable platforms, the company provides design services, customer training, field engineering and technical support.

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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