Report
Dave Nicoski ...
  • Ross LaDuke
EUR 47.43 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Index Supports Breaking; Upgrading Utilities

Indexes continue to violate our key "lines in the sand" as the Russell 2000 (IWM) broke below $208, the S&P 500 broke below 4495, and the equal-weighted Nasdaq 100 (QQEW) broke below $109. This type of damage paints a bearish picture at the index level, and will take some time to repair. Now that key supports have been violated, we are monitoring for oversold conditions that could mark a bottom. It is possible that yesterday's reversal could mark "the low" of this recent pullback, however we would like to see one or two 80-90% upside days in order to have confidence that the low is in. We continue to be very selective, focusing primarily on value and defensive Sectors.

S&P 500, Russell 2000, Nasdaq 100. The S&P 500 broke below our 4495 support level on Thursday, the 200-day MA broke on Friday, then both the 4330-4340 and 4257 levels temporarily broke and then were reclaimed yesterday (Monday). This hammer candlestick at support is typically a short-term bullish signal, and a multi-day rally is likely. Short-term resistance levels to watch include 4430 (the 200-day MA) followed by the 4495-4545 area. A break above 4545 would likely mean a rally back to all-time highs. Additionally, the Russell 2000 (IWM) broke below $208 and the equal-weighted Nasdaq 100 (QQEW) broke below $109; if these indexes are below these levels, we are bearish on them... see chart below and page 3.
Short-Term Oversold. We are watching the % of stocks above their 50-day moving averages on the S&P 500 and Russell 2000 to gauge where we expect some kind of a short-term reversal. Yesterday this number hit 19.8% on the S&P 500 and 10.7% on the Russell 2000, and both are levels that have historically been consistent with a bullish short-term reversal (outside of prolonged bear markets)... see page 4.
Positive Indicators. The market continues to send positive signals from certain areas including high yield spreads, RS on emerging markets (EEM) and Industrials (XLI), WTI crude oil, and 10- and 30-year Treasury yields. It is hard to be overly bearish while these positive developments remain intact... see pages 5-6.
Underlyings
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 holdings.

Avista Corporation

Avista is a holding company. Through its subsidiaries, the company is primarily an electric and natural gas utility with certain other business ventures. The company has two reportable business segments: Avista Utilities, which provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho, as well as natural gas distribution service in parts of northeastern and southwestern Oregon; and Alaska Electric Light and Power Company, which provides electric services in Juneau, AK. The company also has other businesses, including sheet metal fabrication, venture fund investments, real estate investments, as well as certain other investments.

CMS Energy Corporation

CMS Energy is a holding company. The company has several subsidiaries, including: Consumers Energy Company, an electric and gas utility that serves individuals and businesses operating in the alternative energy, automotive, chemical, food, and metal products industries, as well as a group of other industries; CMS Enterprises Company, 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; and EnerBank USA, an industrial bank located in Utah that provides unsecured consumer installment loans, primarily for financing home improvements.

Consolidated Edison Inc.

Consolidated Edison is a holding company. Through its subsidiaries, the company is engaged in provision of energy services. The company's subsidiaries include: Consolidated Edison Company of New York, Inc.'s principal business operations are its regulated electric, gas and steam delivery businesses; Orange & Rockland Utilities, Inc.'s principal business operations are its regulated electric and gas delivery businesses; Con Edison Clean Energy Businesses, Inc. develops, owns and operates renewable and energy infrastructure projects and provides energy-related products and services to wholesale and retail customers; and Con Edison Transmission, Inc. invests in electric and gas transmission projects.

Deutsche Telekom AG

Deutsche Telekom is engaged in the telecommunications services and information technology sectors. Co. operates as an integrated telecommunications provider. It is organized into four operating segments: Germany, Europe, and the United States; and Systems Solutions, as well as Group Headquarters and Shared Services. Co. provides fixed-network lines, broadband lines and mobile communications. Co. also provides customized Information and Communication Technology (ICT) solutions for corporate customers under the T-Systems brand. The Group Headquarters and Shared Services segment comprises cross-segment management functions, real estate services, and mobility solutions, among others.

Dominion Energy Inc

Dominion Energy is a holding company. Through its subsidiaries , the company is engaged in producing and transporting energy. The company's operations are conducted through its subsidiaries: Virginia Electric and Power Company, which is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina; and Dominion Energy Gas Holdings, LLC, which serves as the intermediate parent company for the company's Federal Energy Regulatory Commission-regulated interstate natural gas transmission pipeline and underground storage systems in the eastern and Rocky Mountain regions, as well as for the liquefied natural gas import/export and storage facility.

Duke Energy Corporation

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 United States; 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 United States.

exceet Group SE

Exceet Group SE, formerly known as Helikos SE, is a Luxembourg-based investment vehicle. The Company was established for the purpose of acquiring one or more operating businesses with principal business operations in Germany through a merger, capital stock exchange, share purchase, asset acquisition, reorganization or similar transactions. The Company would conduct all its operations through Helikos Acquisition GmbH & Co. KG (Helikos KG), a German limited partnership managed by the wholly owned subsidiary, Helikos Management GmbH (Helikos GmbH), which would be the general partner of Helikos KG.

Fortis Inc.

Fortis is principally an international electric and gas utility holding company. Co. also holds investments in non-regulated generation assets. Co.'s business segments are: Regulated Electric & Gas Utilities - United States; Regulated Gas Utility - Canadian; Regulated Electric Utilities - Canadian; Regulated Electric Utilities - Caribbean; Non-Regulated - Fortis Generation; Non-regulated - Non-Utility; and Corporate and Other. Its regulated utilities served more than 3.0 million customers across Canada and in New York State and the Caribbean. Co. also holds investments in non-regulated generation assets in Canada and Belize, through Fortis Generation.

iShares MSCI Emerging Markets ETF

iShares Russell 2000 Index Fund

NiHAO Mineral Resources Int'l

NiHAO Mineral Resources International, Inc. is a Philippine-based mining company engaged in exploring, developing and operating nickel properties. The Company has three mining claims, which include Botolan Mining Claim, Manticao Mining Claim and Masbate 13 Mining Claim. The Company's Mining Claims cover a total of approximately 11,162.40 hectares. The Botolan Mining Claim covers over 5,080 hectares located in the town of Botolan, Zambales. The Manticao Mining Claim covers a total area of approximately 1,940 hectares and is located in Manticao, Misamis Oriental, a coastal town north of Mindanao Island. The Masbate Mining Claim covers a total area of approximately 4,140 hectares, and is located in Milagros and Mandaon, Masbate. The Masbate Mining Claim is in pre-exploration stage. The Company's subsidiaries include Mina Tierra Gracia, Inc., Bountiful Geomines, Inc. and Oregalore, Inc.

PG&E Corporation

PG&E is a holding company that conducts its business through Pacific Gas and Electric Company (Utility), a public utility engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electric transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides natural gas transportation services to small commercial and residential customers and to industrial, commercial, and natural gas-fired electric generation facilities that are connected to the Utility's gas system in its service territory.

PPL Corporation

PPL is a utility holding company. Through its regulated utility subsidiaries, the company delivers electricity to customers in United Kingdom, Pennsylvania, Kentucky, and Virginia; delivers natural gas to customers in Kentucky; and generates electricity from power plants in Kentucky. The company's segments are: United Kingdom Regulated, which has regulated electricity distribution operations in United Kingdom; Kentucky Regulated, which is engaged in the regulated generation, transmission, distribution and sale of electricity in Kentucky and Virginia, and the distribution and sale of natural gas in Kentucky; and Pennsylvania Regulated, which delivers electricity in eastern and central Pennsylvania.

Public Service Enterprise Group Inc

Public Service Enterprise Group, through its subsidiaries, is engaged in the energy industry. The company conducts its business through two subsidiaries, Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power). PSE&G is a public utility, which is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey; and PSEG Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through energy sales in energy markets primarily in the Northeast and Mid-Atlantic United States.

Select Sector SPDR-Industrial

Select Sector SPDR-Utilities

WEC Energy Group Inc

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.

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 other, which includes steam revenue and appliance repair services.

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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