Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.65 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Bear Market Rally Remains in Play

Despite a few tumultuous trading days, the S&P 500 remains above its 200-week MA (3590-3600) and the Russell 2000 (IWM) remains above $163 -- both important support levels moving forward. We continue to see potential for a bear market rally (~+10% from the lows) as long as these support levels hold; bear market rallies would be confirmed by bullish reversals of the 2-month downtrends, or breaks above 3810 on the S&P 500 and above $174 on the IWM, the latter of which appears to be happening this morning. Longer-term, this is still a bear market until the S&P 500 and Russell 2000 can break above their respective 200-day MAs.

Long-Term Supports Holding, With One Exception. In recent weeks we have discussed how Financials (XLF), Industrials (XLI), Technology (XLK), Consumer Discretionary (RCD, XLY), ARK Innovation (ARKK), and Bitcoin are all testing multi-year support, some going all the way back to 2007. All continue to hold above support except for Technology (XLK), which broke below $122-123. The XLK breaking below $122 raises concerns that the others could follow, but if the XLK can reclaim $123 it would be a short-term tailwind for the broad market. Additionally, Industrials (XLI) and banks (KRE) are hitting 1.5-year RS highs, while Financials (XLF) are at 7-month RS highs; this is not the type of leadership that we would expect to see during a bear market... see pages 3-4.
Commodities, U.S. Dollar (DXY), 10-Yr Treasury Yield. We continue to monitor this trio for signs of tops; we believe at least two of these three need to start new downtrends in order for the broad equity market to establish a reliable bottom. The Bloomberg Commodity index (DJP) continues to consolidate within a descending triangle pattern, which is typically bearish, though a top can only be confirmed on a break below $32.50 on the DJP. On the other hand, the U.S. dollar (DXY) and 10-year Treasury yield still display virtually no signs of letting up... see page 5.
Cyclicals vs. Staples, Value vs. Growth. The equal-weighted Cyclicals vs. Staples ratio (RCD vs. RHS) continues to move sideways, which suggests a stalemate between stock market bulls and bears; we will be watching for a breakout (bullish) or breakdown (bearish) in this ratio. Value vs. growth ratios tell different stories when looking across the market cap spectrum; value is outperforming within large-caps, while there is no clear leader within mid- and small-caps... see pages 5-6.
Underlyings
Allstate Corporation

Allstate is a holding company. Through its subsidiaries, the company is engaged in the property and casualty insurance business. The company's segments include: Allstate Protection, which provides private passenger auto, homeowners, other personal lines and commercial insurance; Service Businesses, which includes SquareTrade that provides consumer protection plans and related technical support; Allstate Life, which provides interest-sensitive and variable life insurance products, as well as distributes non-proprietary retirement products; and Allstate Benefits, which provides voluntary benefits products, including life, accident, critical illness, and other health insurance products.

Amalgamated Financial Corp

Atlantic Union Bankshares Corporation

Union Bankshares is a financial holding company and a bank holding company. Through its subsidiary, Atlantic Union Bank (the Bank), the company provides a range of financial services throughout Virginia and in portions of Maryland and North Carolina. The Bank provides consumers and businesses a range of banking and related financial services, including checking, savings, certificates of deposit, and other depository services, as well as loans for commercial, industrial, residential mortgage, and consumer purposes. The Bank also provides mobile and internet banking services and online bill payment for all customers, whether retail or commercial.

Banco Bradesco S.A. ADS,

Banco Santander Mexico ADS

Bank OZK

Bank OZK provides a range of retail and commercial banking services. The company also provides, among other products and services, treasury management services for businesses, individuals and non-profit and governmental entities, including wholesale lock box services, remote deposit capture services, trust and wealth management services for businesses, individuals and non-profit and governmental entities, real estate appraisals, ATMs, telephone banking, online and mobile banking services, debit cards and safe deposit boxes. Through third party providers, the company provides credit cards for consumers and businesses and processing of merchant debit and credit card transactions.

Berkshire Hathaway Inc. Class B

Berkshire Hathaway is a holding company. Co.'s subsidiaries are engaged in several business activities which include: underwriting private passenger automobile insurance; operation of a railroad system in North America; regulated electric and gas utility; manufacturing of products including industrial, consumer and building products; wholesale distribution of groceries and non-food items; provider of services including aviation pilot training, electronic components distribution and retailing businesses, including automotive dealerships; and manufactured housing and related consumer financing, transportation equipment, manufacturing and leasing, and furniture leasing.

Chubb Limited

City Holding Company

City Holding is a financial holding company. Through its wholly-owned subsidiary, City National Bank of West Virginia (City National), the company provides banking, trust and investment management and other financial solutions through its network of bank branches and associates located in West Virginia, Kentucky, Virginia and southeastern Ohio. City National's products and services include: Commercial Banking, which provides a range of commercial banking services to corporations and other business customers; and Consumer Banking, which provides banking services to consumers, including checking, savings and money market accounts as well as certificates of deposit and individual retirement accounts.

Community Trust Bancorp Inc.

Community Trust Bancorp is a bank holding company. Through its subsidiaries, the company engages in a range of commercial and personal banking and trust and wealth management activities, which include accepting time and demand deposits; making secured and unsecured loans to corporations, individuals and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes; and providing funds transfer services. The lending activities of the company's subsidiary, Community Trust Bank, Inc., include making commercial, construction, mortgage, and personal loans. Lease-financing, lines of credit, term loans, and other loans are also available.

FB Financial Corporation

FB Financial is a bank holding company. Through its bank subsidiary, FirstBank (the Bank), the company is engaged in providing a suite of commercial and consumer banking services to clients. The company's commercial lending products include working capital lines of credit, equipment loans, owner-occupied and non-owner-occupied real estate construction loans, mini-perm real estate term loans, and cash flow loans to a mix of clients, including small and medium sized businesses. The company's consumer lending products include first and second residential mortgage loans, home equity lines of credit and consumer installment loans to purchase cars, boats and other recreational vehicles.

First Citizens BancShares Inc. Class A

First Citizens BancShares is a holding company. Through its banking subsidiary, First-Citizens Bank & Trust Co. (FCB), the company provides a range of retail and commercial banking services. Loan services include various types of commercial, business and consumer lending. Deposit services include checking, savings, money market and time deposit accounts. The company's subsidiaries also provides mortgage lending, a trust department, wealth management services for businesses and individuals and other activities incidental to commercial banking. FCB's subsidiaries provide various investment products including annuities, discount brokerage services and third-party mutual funds.

Fulton Financial Corporation

Fulton Financial is a bank holding company. Through its subsidiary, Fulton Bank, N.A., the company provides a range of consumer and commercial banking products and services in its local market area. Personal banking services include various checking account and savings deposit products, certificates of deposit and individual retirement accounts. Secured consumer loan products include home equity loans and lines of credit, which are underwritten based on loan-to-value limits specified in the company's lending policy. The company also provides a variety of fixed, variable and adjustable rate products, including construction loans and jumbo residential mortgage loans.

Home BancShares Inc.

Home Bancshares is a bank holding company. Through its subsidiary, Centennial Bank (the Bank), the company is primarily engaged in providing a range of commercial and retail banking and related financial services to businesses, real estate developers and investors, individuals and municipalities. The Bank has branch locations in Arkansas, Florida, South Alabama and New York City. The company originates loans secured by single and multi-family real estate, residential construction and commercial buildings. The company also provides a range of deposit services, including checking, savings, money market accounts and certificates of deposit.

Huntington Bancshares Incorporated

Huntington Bancshares is a holding company. Through its subsidiaries, the company provides commercial, small business, consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment leasing, investment management, trust services, brokerage services, insurance programs, and other financial products and services. The company's segments include: Consumer and Business Banking, which provides financial products and services to consumer and small business customers; and Commercial Banking, which provides products and services to the middle market, large corporate, real estate and government public sector customers.

Itau Unibanco Holding S.A. Sponsored ADR Pfd

NBT Bancorp Inc.

NBT Bancorp is a financial holding company. Through its subsidiary, NBT Bank, National Association (the Bank), the company mainly provides commercial banking, retail banking and wealth management services. Deposit products provided by the Bank include demand deposit accounts, savings accounts, negotiable order of withdrawal accounts, money market deposit accounts and certificate of deposit accounts. Loan products provided by the Bank include indirect and direct consumer loans, home equity loans, mortgages, business banking loans and commercial loans. The Bank also provides various other products and services such as trust and investment services and financial planning and life insurance services.

Pinnacle Financial Partners Inc.

Pinnacle Financial Partners is a bank holding company. Through its subsidiary, Pinnacle Bank, the company provides banking services, including investment, mortgage, and insurance services, and wealth management services. The company provides a range of lending products, including commercial, real estate and consumer loans to individuals and small-to medium-sized businesses and other entities. Pinnacle Bank's deposit services include savings, checking, noninterest-bearing checking, interest-bearing checking, money market and certificate of deposit accounts. Pinnacle Bank contracts with Raymond James Financial Services, Inc. to provide and sell various securities and other financial products to the public.

Progressive Corporation

Progressive is an insurance holding company. The company's insurance subsidiaries and affiliates provide personal and commercial auto insurance, personal residential property insurance, and other insurance and related services. The company's Personal Lines segment writes insurance for personal autos and recreational and other vehicles. The Commercial Lines segment writes auto-related primary liability and physical damage insurance, and business-related general liability and property insurance, each predominately for small businesses. The company focuses on property insurance for homes, condos, manufactured homes, and renters, as well as personal umbrella insurance and primary and excess flood insurance.

S&T Bancorp Inc.

S&T Bancorp is a bank holding company and a financial holding company. Through S&T Bank and its non-bank subsidiaries, the company provides consumer, commercial and small business banking services, which include accepting time and demand deposits and originating commercial and consumer loans, brokerage services and trust services including serving as executor and trustee under wills and deeds and as guardian and custodian of employee benefits. The company also manages private investment accounts for individuals and institutions through its registered investment advisor.

The Bancorp

The Bancorp is a financial holding company. The company's primary subsidiary is a wholly owned subsidiary bank, The Bancorp Bank (the Bank). The Bank has four primary lines of specialty lending: securities-backed lines of credit and insurance policy cash value-backed lines of credit, leasing (direct lease financing), small business loans and loans generated for sale into capital markets through commercial loan securitizations and other sales. Through the Bank, the company also provides banking services nationally, which include prepaid card accounts, private label banking, deposit accounts to investment advisors' customers, card payment and other payment processing.

TowneBank

TowneBank provides retail and commercial banking services in Virginia and North Carolina. The company's segments include: Banking, which provides loan and deposit services, commercial mortgage brokerage services and a variety of investment and asset management services; Realty, which provides residential real estate services and originations of a variety of mortgage loans, resort property management and residential and commercial title insurance; and Insurance, which provides an array of insurance products, including life, property, casualty, travel, and vehicle insurance, as well as employee and group benefits.

Travelers Companies Inc.

Travelers Companies is a holding company. Through its subsidiaries, the company is engaged in providing commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. The company's segments include: Business Insurance, which provides property and casualty insurance and insurance-related services; Bond and Specialty Insurance, which provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services, and certain specialty insurance products; and Personal Insurance, which writes property and casualty insurance covering individuals' personal risks.

WesBanco Inc.

WesBanco is a bank holding company. Through its subsidiaries, the company provides a range of financial services including retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. The company operates two segments: community banking, which provides services provided by commercial banks, including commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and certain non-traditional offerings; and trust and investment services, which provides trust services as well as various alternative investment products including mutual funds.

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

Other Reports on these Companies
Other Reports from Vermilion Research

ResearchPool Subscriptions

Get the most out of your insights

Get in touch