Report
Dave Nicoski ...
  • Ross LaDuke
EUR 43.59 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Downgrading Outlook to Bearish; Stay Defensive

We are officially downgrading our outlook to bearish with the S&P 500 (SPX) violating major support at 6480-6520, Nasdaq futures (NQ) violating 24,000 support, and the Russell 2000 (IWM) breaking down below crucial $245 support. This comes after downgrading our outlook to neutral in our 3/3/26 Compass. Concerns that we discussed since early-February stemmed from deteriorating market dynamics, and ever since then we have been "concerned about a deeper pullback, likely to 6720-6776, 6690, or 6480-6520 on SPX," while also discussing since mid-March how "downside capitulation is likely needed before finding a reliable bottom." With continued deterioration in market dynamics, we just discussed last week (3/24/26 Compass) how we were "increasingly concerned about a breakdown below 6480" and that "the SPX likes to test the 200-day MA as resistance (from below) before continuing lower, and this is likely what happened on 3/23/26." 6200 and 6150 are the next supports to watch, and we would continue to be sellers on any rallies to 6480-6520 and 200-day MA resistances.

More Downside Ahead. We still see reason for caution: (1) U.S. interest rate volatility (MOVE index) remains at 11-month highs and remains above the crucial 85 level. (2) The U.S. dollar (DXY) displays a bull flag breakout and appears likely to break above crucial resistance at $100.25-$100.80, which would be bearish for global equities. (3) High yield spreads are at 9-month wides, and have widened above the crucial 320bps level. (4) Defensive Sectors (Staples, Utilities, and Real Estate), Energy (XLE), and Materials (XLB) remain leadership, which is as unhealthy as it gets. (5) WTI crude oil displays a bull flag breakout after holding above crucial $88 support (and we remain bullish on crude oil, as we have been throughout all of 2026). (6) Semiconductors (SMH, SOXX) are starting to violate crucial horizontal supports... see pages 2-5.
Big Picture Trends. SPX, Treasuries, and gold had all been selling off together, but as of Friday and Yesterday (Monday) we are seeing a clear change of character, where 2-year Treasuries and precious metals are rallying alongside a declining SPX; we believe this suggests participants are shifting their concern from inflation to recession. We agree and we are buyers of gold and silver on this pullback. The 10-year Treasury yield remains above 4.30% support for now, but a break below would be time to buy bonds
Underlyings
Alto Ingredients Inc

Andersons Inc.

Andersons is a company rooted in agriculture. The company conducts business across North America in the grain, ethanol, plant nutrient and rail sectors. The company's operations are classified into four reportable business segments: Grain, which provides grain marketing, risk management and corn origination services to its customers and affiliated ethanol facilities; Ethanol, which purchases and sells ethanol, provides facility operations, risk management, and ethanol; Plant Nutrient, which provides warehousing, packaging and manufacturing services to nutrient producers and other distributors; and Rail, which leases, repairs, and sells various types of railcars, locomotives and barges.

Archer-Daniels-Midland Company

Archer Daniels Midland is a human and animal nutrition and an agricultural origination and processing company. The company has three segments: Ag Services and Oilseeds, which includes activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds into vegetable oils and protein meals; Carbohydrate Solutions, which is engaged in corn and wheat wet and dry milling and other activities; and Nutrition, which engages in the manufacturing, sale, and distribution of an array of products including plant-based proteins, natural flavor ingredients, and flavor systems.

Brasilagro Companhia Brasileira de Propriedades Agricolas

Braskem S/A ADS

BUNGE LIMITED

Cabot Corporation

Cabot is a specialty chemicals and performance materials company. The company's principal products are rubber and specialty grade carbon blacks, specialty compounds, fumed metal oxides, activated carbons, inkjet colorants, and aerogel. The company's segments are: Reinforcement Materials, which combines the rubber blacks and elastomer composites product lines; Performance Chemicals, which combines its specialty grades of carbon black, fumed metal oxides and aerogel product lines in its Performance Additives business, and combines its specialty compounds and inkjet product lines in its Formulated Solutions business; and Purification Solutions, which represents the company's activated carbon business.

CALUMET INC

Cresud S.A.C.I.F. ADS

CVR Energy Inc.

CVR Energy is a holding company. The company is engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in CVR Refining, LP (CVR Refining) and CVR Partners, LP (CVR Partners). CVR Refining is an independent petroleum refiner and marketer of transportation fuels. CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. The company's segments include: Petroleum, which includes refineries located in Coffeyville, KS and Wynnewood, OK and supporting logistics assets in the region; and Nitrogen Fertilizer, which includes nitrogen fertilizer manufacturing facilities located in Coffeyville, KS and East Dubuque, IL.

Delek US Holdings Inc

Delek US Holdings is a holding company. Through its subsidiaries, the company is engaged in the downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and convenience store retailing. The company's segments are: refining, which processes crude oil and other feedstocks for the manufacture of transportation motor fuels; logistics, which gathers, transports and stores crude oil and markets, distributes, transports and stores refined products; and retail, which includes the operations of Alon USA Energy, Inc.'s convenience store sites located primarily in central and West Texas and New Mexico.

Green Plains Inc.

Green Plains is a holding company. Through its subsidiaries, the company is an ethanol producer. The company has four operating segments: ethanol production, which includes the production of ethanol, distillers grains and corn oil; agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities; food and ingredients, which includes cattle feeding and food-grade corn oil operations; and partnership, which includes fuel storage and transportation services.

HOLLYFRONTIER CORP

Ingredion Incorporated

Ingredion provides ingredients solutions. The company turns corn, tapioca, potatoes, grains, fruits, and vegetables into ingredients and biomaterials for the food, beverage, brewing and other industries. The company's product lines include starches and sweeteners, animal feed products and edible corn oil. The company's starch-based products include both food-grade and industrial starches, and biomaterials. The company's sweetener products include glucose syrups, maltose syrups, fructose corn syrup, caramel color, dextrose, polyols, maltodextrins, and glucose and syrup solids. The company's products are derived from the processing of corn and other starch-based materials, such as tapioca, potato, and rice.

Koppers Holdings Inc.

Koppers Holdings is a holding company. Through its subsidiaries, the company is a provider of treated wood products, wood treatment chemicals, and carbon compounds. The company operates three principal business segments: Railroad and Utility Products and Services, which supplies railroad crossties to the North American railroads; Performance Chemicals, which manufactures and supplies water-based wood preservatives and wood specialty additives to treaters who supply the residential, agricultural and industrial pressure-treated wood markets; and Carbon Materials and Chemicals, which processes coal tar into a variety of products, including creosote and other related railroad products.

Methanex Corporation

Methanex is a producer and supplier of methanol to the international markets of Asia Pacific, North America, Europe and South America. Co.'s operations consist of the production and sale of methanol, a commodity chemical.

Murphy USA Inc.

Murphy USA is a holding company. Through its subsidiaries, the company's business consists primarily of the marketing of retail motor fuel products and convenience merchandise through its retail stores. The company's retail stores are located in the Southeast, Southwest and Midwest United States. The company's business also includes certain product supply and wholesale assets, including product distribution terminals and pipeline positions. The company purchases fuel from oil companies, independent refiners, and other marketers, and it sells fuel to its customers. In addition to the motor fuel sold at the company's stores, its stores carry a selection of snacks, beverages, tobacco products and non-food merchandise.

Orion Engineered Carbons SA

Par Pacific Holdings Inc

Par Pacific Holdings owns and operates energy and infrastructure businesses. The company's refining segment consists of a refinery in Kapolei, HI, that produces ultra-low sulfur diesel (ULSD), gasoline, jet fuel, marine fuel, low sulfur fuel oil, and other associated refined products. The company's refinery in Newcastle, WY, produces gasoline, ULSD, jet fuel, and other associated refined products and the company's refinery in Tacoma, WA, produces distillate, gasoline, asphalt, and other associated refined products. The company's retail segment operates retail outlets in Hawaii, Washington, and Idaho. The company's logistics segment owns and operates terminals, pipelines, a single-point mooring, and trucking operations.

PBF Energy Inc. Class A

PBF Energy is a holding company. Through its subsidiaries, the company is engaged as an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the U.S. The company operates in two business segments: refining, which the company produces a variety of products at each of its refineries such as gasoline, ultra-low-sulfur diesel, heating oil, jet fuel, lubricants, petrochemicals and asphalt; and logistics, which through its PBF Logistics LP subsidiary, the company owns or leases, operates, develops and acquires crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.

Phillips 66

Phillips 66 is an energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses. The company's segments include: Midstream, which provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and natural gas liquids transportation, storage, processing and marketing services; Chemicals, which manufactures and markets petrochemicals and plastics on a worldwide basis; Refining, which refines crude oil and other feedstocks into petroleum products; and Marketing and Specialties, which purchases for resale and markets refined petroleum products, mainly in the United States and Europe.

REX American Resources Corporation

REX American Resources is a holding company. Through a wholly owned subsidiary REX I.P., LLC, the company entered into a joint venture with Hytken HPGP LLC to file and defend patents for eSteam technology relating to heavy oil and oil sands production methods. The company has two reportable segments, ethanol and by-products, which is a renewable fuel source produced by processing corn and other biomass through a fermentation process that creates combustible alcohol that can be used as an additive or replacement to fossil fuel based gasoline; and refined coal, which applies separate chemicals to convert feedstock coal into refined coal.

Sebata Holdings Ltd

Sebata Holdings Limited, formerly MICROmega Holdings Limited, is an integrated holding company focused on the provision of support services, financial services and information technology (IT). The Company's segments include occupational health and safety, labour supply, information technology, financial services and holdings and consolidated. Its support services include occupational health, safety and environmental risk management services and solutions, and integrated human resource solutions, which include recruitment and labor brokering services. Its financial services include specialist intermediary broking service for commercial banks, investment banks, stock brokers and trading entities in the wholesale financial markets. Its IT solutions include converged communications, cloud computing and IT support services; integrated technology solutions and enterprise management solutions for public sector clients, and supply of smart water meters and electronic water-control devices.

Valero Energy Corporation

Valero Energy is an international manufacturer and marketer of transportation fuels and petrochemical products. The company's segments include: Refining, which includes its refining operations, the associated marketing activities, and logistics assets that support its refining operations; Ethanol, which includes its ethanol operations, the associated marketing activities, and logistics assets that support its ethanol operations; and Renewable Diesel, which includes the operations of its joint ventture, Diamond Green Diesel Holdings LLC, which owns and operates a renewable diesel plant in Norco, LA.

Westlake Chemical Corporation

Westlake Chemical operates as a manufacturer and marketer of basic chemicals, vinyls, polymers and building products. The company operates in two operating segments: Olefins, which manufactures and markets polyethylene, styrene monomer and various ethylene co-products; and Vinyls, which manufactures and markets polyvinyl chloride (PVC), vinyl chloride monomer, ethylene dichloride, chlor-alkali (chlorine and caustic soda), chlorinated derivative products and ethylene, as well as manufactures and sells building products fabricated from PVC, including residential siding, trim and mouldings, pipe and fittings for various water, sewer and industrial applications, and profiles for windows and doors.

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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