Dave Nicoski ...
  • Ross LaDuke
EUR 230.48 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

S&P 500 consolidating despite negative signals

We remain cautious as there continues to be several new or persisting negative signals which tell us that upside is likely to be muted from here -- barring improvements. At the same time we are not seeing widespread breakdowns and the major averages are still consolidating within a 1-month horizontal range. As long as this consolidation continues, a neutral outlook is appropriate.

• Sector Relative Strength Rankings & Weighting Recommendations. Defensives (Staples, Utilities, Real Estate) notched new YTD RS highs yet again over the past week. The longer this continues, the more concerning it becomes for the broad market as it increases the likelihood of a deeper pullback... see page 2.

• New negative signals. Banks (KBE, KRE) are hitting new 26+ week price lows and the S&P 600 vs. S&P 500 (small- vs. large-caps) ratio is breaking to multi-year lows after a brief attempt at bottoming. Much like the above bullet point, the longer this persists in these key cyclical areas of the market, the greater the concern that the broad market may suffer a similar fate and succumb to weakness... see page 3.

• The S&P 500 and the 10-year Treasury yield. There continues to be no signs of interest rate stability, a persistent concern for the equity market. With the major decline in yields that began in November 2018, we take a look at the relationship between the S&P 500 and the 10-year Treasury yield in prior instances where yields dropped substantially (2011-2012 and 2016) to examine what we might expect this time around... see page 4.

In today's report we highlight attractive Groups and stocks within Health Care, Materials, and Utilities: HC-25 Health Care Staffing, MA-30 Silver, Platinum, UT-06 Electric, Midwest, and UT-09 Gas, Southeast... see pages 11-29.
Allete Inc.

Allete is an energy company. The company's segments are: Regulated Operations, which include its regulated utilities, Minnesota Power, and Superior Water, Light and Power Company, and its investment in American Transmission Company LLC; ALLETE Clean Energy, Inc., which focuses on developing, acquiring, and operating renewable energy projects; and U.S. Water Services Holding Company, which provides integrated water management for industry by combining chemical, equipment, engineering and service. The company's Corporate and Other is comprised of BNI Energy, Inc., the company's coal mining operations in North Dakota, and the company's investment in Nobles 2, ALLETE Properties, LLC, the company's Florida real estate investment.

Alliant Energy Corp.

Alliant Energy is a public utility holding company, engaged in providing regulated electric and natural gas service. The company's subsidiaries are: Interstate Power and Light Company, which is engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Iowa; Wisconsin Power and Light Company, which is engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Wisconsin; and Alliant Energy Finance, LLC, which manages a portfolio of wholly-owned subsidiaries and additional investments.

Ameren Corp.

Ameren is a public utility holding company. Through its subsidiary, Union Electric Company, the company operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Through its subsidiary, Ameren Illinois Company, the company operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois. Through its Ameren Transmission Company of Illinois subsidiary, the company operates a Federal Energy Regulatory Commission rate-regulated electric transmission business. The company also has other subsidiaries that conduct other activities, such as providing shared services.

American Electric Power Co. Inc.

American Electric Power Company is a public utility holding company. The public utility subsidiaries of the company provide electric service, consisting of generation, transmission and distribution, on an integrated basis to their retail customers. The service areas of the company's public utility subsidiaries cover portions of the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. Transmission networks are interconnected with distribution facilities in the territories served.

Americas Silver Corp

Americas Silver is engaged in the acquisition, exploration, development and exploitation of mineral resource properties in Mexico and the United States. Co. explores for gold, silver, zinc, copper, and lead deposits. The 100% owned Nuestra Senora Mine in the Cosala District of Sinaloa State, Mexico, has flexible mining methods and diversified metal production. It has a mechanized underground operation and a processing facility permitted for expansion to 4,000 tonnes per day. In Idaho, Co. operates the 100%-owned producing Galena Complex which was added following the business combination with U.S. Silver. The Galena Complex has recorded production of over 220 million ounces of silver.

AMN Healthcare Services Inc.

AMN Healthcare Services provides healthcare workforce solutions and staffing services. The company has three segments: nurse and allied solutions, locum tenens solutions and other workforce solutions. Through its segments, the company provides a range of workforce solutions and staffing services including travel nurse staffing; rapid response nurse staffing and labor disruption services; local, or per diem, staffing; locum tenens staffing; allied staffing; physician permanent placement services; interim leadership staffing and executive search services; managed services programs; vendor management systems; recruitment process outsourcing; workforce optimization services; and mid-revenue cycle management.

Atmos Energy Corp.

Atmos Energy is engaged in the regulated natural gas distribution and pipeline and storage businesses. The company delivers natural gas through regulated sales and transportation arrangements to residential, commercial, public-authority and industrial customers located primarily in the South. The company also operates intrastate pipelines in Texas. The company operates through the following segments: distribution, which is primarily comprised of its regulated natural gas distribution and related sales operations; and pipeline and storage, which consists of the pipeline and storage operations of its Atmos Pipeline-Texas division and its natural gas transmission operations in Louisiana.

CMS Energy Corp.

CMS Energy is a holding company. The company has several subsidiaries, including Consumers Energy Company (Consumers), an electric and gas utility, and CMS Enterprises Company (CMS Enterprises), primarily a domestic independent power producer and marketer. Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, food, and metal products industries, as well as a diversified group of other industries. CMS Enterprises, through its subsidiaries and equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production.

Coeur Mining Inc

Coeur Mining is a gold and silver producer, as well as a zinc and lead producer, with mines located in the U.S., Canada, Mexico, and exploration projects in North America. The company operates the Palmarejo complex, and the Rochester, Kensington, Wharf and Silvertip mines. The company's dore, as well as the concentrate product produced by the Wharf mine, is refined into gold and silver bullion and then sells to multi-national banks, bullion trading houses, and refiners across the globe. The company's gold concentrate products from the Kensington mine and the zinc and lead concentrates from the Silvertip mine are sold under a variety of agreements with smelters and traders.

Cross Country Healthcare

Cross Country Healthcare provides healthcare staffing, recruiting and workforce solutions. The company's business consists of three business segments: Nurse and Allied Staffing, which provides staffing, recruiting, and workforce solutions including temporary and permanent placement of travel and local branch-based nurse and allied personnel; Physician Staffing, which provides physicians, certified registered nurse anesthetists, nurse practitioners and physician assistants under its Medical Doctor Associates brand; and Other Human Capital Management Services, which is comprised of retained and contingent search services for physicians, healthcare executives, and other healthcare personnel.

DTE Energy Co.

DTE Energy is a holding company. The company is engaged in the generation, purchase, distribution and sale of electricity to customers in southeastern Michigan through its DTE Electric Company subsidiary, as well as in the purchase, storage, transportation, distribution and sale of natural gas throughout Michigan and the sale of storage and transportation capacity through its DTE Gas Company subsidiary. The company's non-utility operations are: gas storage and pipelines, which consists of natural gas pipeline, gathering, transportation, and storage businesses; power and industrial projects; and energy trading, which consists of energy marketing and trading operations.

Duke Energy Corp.

Duke Energy is a holding company. Through its subsidiaries, the company operates as an energy company. The company's segments include: Electric Utilities and Infrastructure, which provides retail electric service through the generation, transmission, distribution and sale of electricity to customers within the Southeast and Midwest regions of the U.S.; Gas Utilities and Infrastructure, which conducts natural gas operations, as well as owns, operates and has investments in various pipeline transmission and natural gas storage facilities; and Commercial Renewables, which acquires, develops, builds, operates and owns wind and solar renewable generation throughout the continental U.S.

Endeavour Silver Corp.

Endeavour Silver is engaged in silver mining in Mexico and related activities including acquisition, exploration, development, extraction, processing, refining and reclamation. Co. is also engaged in exploration activities in Chile. Co. has three operating mining segments, GuanacevA, Bolanitos and El Cubo, which are located in Mexico as well as Exploration and Corporate segments. The Exploration segment consists of projects in the exploration and evaluation phases in Mexico and Chile.

Entergy Corp.

Entergy is a holding company. Through its subsidiaries, the company is an integrated energy company engaged mainly in electric power production and retail distribution operations. The company owns and operates power plants. The company operates through two segments: Utility, which generates, transmits, distributes and sells electric power to retail and wholesale customers in Arkansas, Louisiana, Mississippi, and Texas; and Entergy Wholesale Commodities, which includes the ownership, operation, and decommissioning of nuclear power plants, located in the northern U.S., the sale of the electric power produced by its operating plants to wholesale customers, and also provides operations and management services.


Evergy, through its operating subsidiaries, Kansas City Power & Light Company and Westar Energy, Inc, provides clean, safe and reliable energy to 1.6 million customers in Kansas and Missouri.

First Majestic Silver

First Majestic Silver is engaged in the business of silver production, development, exploration, and acquisition of mineral properties with a focus on silver production in Mexico.

FirstEnergy Corp.

FirstEnergy is a public utility holding company. The company and its subsidiaries are principally involved in the transmission, distribution and generation of electricity. The company's reportable operating segments are comprised of: Regulated Distribution, which distributes electricity through the company's utility operating companies and also controls regulated electric generation capacity located primarily in West Virginia, Virginia and New Jersey; and Regulated Transmission, which provides transmission infrastructure owned and operated by the transmission companies and certain of the company's utilities to transmit electricity from generation sources to distribution facilities.

Fortuna Silver Mines Inc.

Fortuna Silver Mines is engaged in the mining, exploration, extraction and processing of silver, gold and zinc mine properties in southern Peru and Mexico.

MAG Silver Corp.

MAG Silver is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreement, principally in Mexico. Co. has not yet determined whether the properties on which it is conducting exploration contain any ore reserves that are economically recoverable. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, Co.'s ability to obtain the necessary financing to complete the development of the interests, and future profitable production, or alternatively, upon Co.’s ability to dispose of its interests on a profitable basis.

MDU Resources Group Inc.

MDU Resources Group is a regulated energy delivery and construction materials and services business. The company's segments are: Electric, which generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming; Natural Gas Distribution, which distributes natural gas in Idaho, Minnesota, Oregon and Washington; Pipeline and Midstream, which provides natural gas transportation, underground storage and gathering services; Construction Materials and Contracting, which operates mine, process and sell construction aggregates; produce and sell asphalt mix; and supply ready-mixed concrete; and Construction Services, which provides specialty contracting services.

MGE Energy Inc.

MGE Energy is a public utility holding company. Operating through its subsidiaries, the company has five business segments: regulated electric utility operations, which generates, purchases, and distributes electricity through its subsidiary, Madison Gas and Electric Company (MGE); regulated gas utility operations, which purchases and distributes natural gas through MGE; nonregulated energy operation, which owns and leases electric generating capacity that assists MGE through the company's wholly owned subsidiaries MGE Power Elm Road, LLC and MGE Power West Campus, LLC; and transmission investments, which represents the company's investment in American Transmission Company LLC and ATC Holdco, LLC.

NiSource Inc.

NiSource is an energy holding company. Through its subsidiaries, the company is a natural gas distribution company. The company's reportable segments are: Gas Distribution Operations and Electric Operations. For its gas distribution operations, through its wholly-owned subsidiary, NiSource Gas Distribution Group, Inc., the company owns distribution subsidiaries that provide natural gas to residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts. Through its electric operations, the company generates, transmits and distributes electricity through its subsidiary, Northern Indiana Public Service Company LLC, and engages in wholesale and transmission transactions.

North American Palladium Ltd.

North American Palladium is engaged in the exploration, mining, acquisition and production of palladium, gold, platinum, nickel, copper and other precious metals properties in Canada.

OGE Energy Corp.

OGE Energy is a holding company. Through its subsidiaries, the company is an energy and energy services provider providing physical delivery and related services for both electricity and natural gas primarily in the south central U.S. The company conducts these activities through two business segments: electric utility, which generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas; and natural gas midstream operations, which consist of the company's investment in Enable Midstream Partners, LP that involves in the business of gathering, processing, transporting and storing natural gas.

Pan American Silver Corp.

Pan American Silver is engaged in the production and sale of silver, gold and other base metals including copper, lead and zinc as well as other related activities, including exploration, extraction, processing, refining and reclamation. Co.'s primary product (silver) is produced in Peru, Mexico, Argentina and Bolivia. Additionally, Co. has project development activities in Peru, Mexico and Argentina, and exploration activities throughout South America and Mexico.

Puxin ADS (N Shares)

Silvercorp Metals

Silvercorp Metals is engaged in the operation and development of and in the acquisition and exploration for high-grade silver-related mineral properties in the People's Republic of China. The Ying Mining District consists of four mines (SGX, HPG, TLP, and LM) and is Co.'s primary source of production.

SSR Mining

SSR Mining is engaged in the acquisition, exploration, development and operation of silver-dominant resource properties located in the Americas. Co.'s strategic focus is to optimize the production of silver from its Pirquitas mine in Argentina, and to advance other principal development and exploration projects including San Luis in Peru, Diablillos in Argentina, and Pitarrilla and San Agustin in Mexico. In addition to its principal projects, Co. holds a geologically-diverse portfolio of other predominantly silver projects in various stages of exploration.

WEC Energy Group

WEC Energy Group is a holding company. Through its subsidiaries, the company provides regulated natural gas and electricity, and nonregulated renewable energy. The company's segments include: Wisconsin, which generates and distributes electric energy and provides retail natural gas distribution service; Illinois, which includes the natural gas utility operations; Electric Transmission, which owns, maintains, monitors, and operates electric transmission systems in Wisconsin, Michigan, Illinois, and Minnesota; and Non-Utility Energy Infrastructure, which owns and leases generating facilities to its Wisconsin Electric Power Company subsidiary and owns underground natural gas storage facilities in Michigan.

Wheaton Precious Metals

Wheaton Precious Metals is engaged in the silver mining business.

Xcel Energy Inc.

Xcel Energy is a regulated electric and natural gas delivery company which serves customers in mid-western and western states, including portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. The company's reportable segments include: regulated electric utility, which generates, transmits and distributes electricity in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico; regulated natural gas utility, which transports, stores and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado; and all other, which includes steam revenue and appliance repair services.

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.

Dave Nicoski

Ross LaDuke

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Christopher Muir
Matthew Miller
Christopher Muir
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