Report
Dave Nicoski ...
  • Ross LaDuke
EUR 221.78 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Still Bullish, But With Reservations

And just like that, the S&P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (XLB, XME) and Energy (RYE) Sectors, and also small-caps (IWM) which continue to hit new RS lows. Still, the Materials and Energy Sectors make up just over 6% the S&P 500, so the market does not need them in order to move higher. We are on watch for these laggards to play catch up with the rest of the market, which would help create a more perfect bullish scenario.

• Sector Relative Strength Rankings & Weighting Recommendations. Cap-weighted Technology continues to lead the way as Energy and Materials cluster at the bottom of our rankings. Stocks highlighted include: MDB, OKTA, PLAN, SMAR, TWLO, WDAY, ZEN, SPNS, AMT, SBAC, and CCI... see pages 2-5.

• Support Levels Holding. Support levels are holding for key areas such as Financials/banks (XLF, KBE, EUFN), small caps (IWM), Materials (XLB), Energy (RYE), Industrials (XLI), copper, retail (XRT), transports (IYT, XTN), and high yield bonds (HYG, JNK). None of these areas are leadership, however as long as they do not break down in terms of price there is reason to believe this bull market remains viable... see pages 6-7.

• US Dollar, Emerging Markets. A strengthening US dollar along with coronavirus concerns has been problematic for the MSCI EM index. Still, MSCI China - the largest and therefore most important area within EM (34% of MSCI EM) - is not breaking to new lows in price or RS, giving broad EM a fighting chance... see page 8.

In today's report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: CD-06 Homebuilding, Large-Cap, CD-24 Casinos & Gaming, Small-Cap, FN-24 Asset Management & Custody Banks, Large-Cap, and FN-32 Investment Banking & Brokerage, Small-Cap... see pages 15-27.
Underlyings
American Tower Corp

American Tower is a holding company. Through its subsidiaries, the company is a real estate investment trusts and an independent owner, operator and developer of multitenant communications real estate. The company's primary business is the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. The company also provides tower-related services, including site acquisition, zoning and permitting and structural analysis, which primarily support its site leasing business, including the addition of new tenants and equipment on its sites.

Ameriprise Financial

Ameriprise Financial is a holding company. Through its subsidiaries, the company provides a range of products and services to individual and institutional clients. The company has the following segments: Advice and Wealth Management, which provides financial planning and advice, as well as brokerage services, primarily to retail clients through its financial advisors; Asset Management, which provides investment management and advice and investment products to clients through its subsidiaries; Annuities, which provides RiverSource variable and fixed annuity products to individual clients; and Protection, which provides a variety of products including life, disability income and property casualty insurance.

Anaplan

Anaplan provides a cloud-based connected planning platform that helps connect organizations and people to make better and faster decisions. The company delivers its application over the Internet as a subscription service using a software-as-a-service (SaaS) model. The company also offers professional services related to implementing and supporting its application.

Blackrock Inc

BlackRock is an investment management firm. The company provides a range of investment and technology services to institutional and retail clients worldwide. Products are provided directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares? exchange-traded funds, separate accounts, collective investment trusts and other pooled investment vehicles. The company also provides technology services, including the investment and risk management technology platform, Aladdin?, Aladdin Wealth, Cachematrix and FutureAdvisor, as well as advisory services and solutions to a base of institutional and wealth management clients.

Boyd Gaming Corp.

Boyd Gaming is a gaming company. The company owns gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. The company's segments include: Las Vegas Locals, which includes casinos that primarily serve the resident population of the Las Vegas metropolitan area; Downtown Las Vegas, which focuses on gaming enthusiasts from Hawaii and tour and travel agents in Hawaii; and Midwest and South, which includes land-based casinos, dockside riverboat casinos, racinos and barge-based casinos that operate in the Midwest and southern U.S. The company also operates a travel agency and a captive insurance company that underwrites travel-related insurance.

Churchill Downs Inc.

Churchill Downs is a racing, gaming and online entertainment company. The company owns and operates a legal online horseracing wagering platform in the U.S., through its TwinSpires business. Co. manages its operations through five segments: Racing, which includes its four racetracks: Churchill Downs Racetrack, Arlington International Race Course, Fair Grounds Race Course and Calder Race Course; Online Wagering, which includes its TwinSpires business and its online sports betting and iGaming business; Casino, which provides brick-and-mortar casino gaming; Other Investments, which includes United Tote Company, Derby City Gaming and its other minor investments; and Corporate.

Crown Castle International Corp.

Crown Castle International is a holding company. Through its subsidiaries, the company owns, operates and leases shared communications infrastructure that is geographically dispersed throughout the U.S., including towers and other structures, such as rooftops (collectively, towers), and fiber primarily supporting small cell networks (small cells) and fiber solutions. The company's towers, fiber and small cells assets are collectively referred to herein as communications infrastructure. The company's core business is providing access, including space or capacity, to its shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease and service agreements.

D.R. Horton Inc.

D.R. Horton is a homebuilding company. The company constructs and sells homes under the names of D.R. Horton, America's Builder, Emerald Homes, Express Homes, Freedom Homes and Pacific Ridge Homes. The company's business operations consist of homebuilding, a majority-owned residential lot development company, financial services and other activities. The company sells single-family detached and attached homes, such as townhomes, duplexes and triplexes. The company's financial services operations provide mortgage financing and title agency services to homebuyers. In addition, the company has subsidiaries that engage in conducting insurance-related operations, constructing and owning rental properties, among others.

ELDORADO RESORTS INC

Eldorado Resorts is a holding company. Through its subsidiaries, the company is a gaming and hospitality company that owns and operates gaming facilities. The company's properties, which are located in Ohio, Louisiana, Nevada, New Jersey, Pennsylvania, West Virginia, Colorado, Florida, Iowa, Mississippi, Illinois, Indiana and Missouri, feature slot machines and video lottery terminals, table games and hotel rooms. The company's gaming operations include hotels, restaurants, bars, entertainment, racing, retail shops and other services. The company also operates Racelinebet.com, a national account wagering service that provides online and telephone wagering on horse races.

Invesco S&P 500 Equal Weight Energy ETF

iShares iBoxx $ High Yield Corporate Bond ETF

iShares MSCI Europe Financials

iShares Russell 2000 Index Fund

Lennar Corp. Cl A

Lennar is a homebuilder in the U.S., an originator of residential and commercial mortgage loans, and a developer of multifamily rental properties. In addition, the company is involved in ventures, and has interests in companies, that are engaged in applying technology to purchasing, residing in and selling homes. The company's homebuilding operations include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which it has investments. The company primarily sell single-family attached and detached homes in communities targeted to first-time, move-up, and active adult, homebuyers.

Materials Select Sector SPDR Fund

Monarch Casino & Resort Inc.

Monarch Casino & Resort, through its wholly-owned subsidiary, Golden Road Motor Inn, Inc., owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, NV (the Atlantis). The company's wholly owned subsidiaries, High Desert Sunshine, Inc., Golden East, Inc. and Golden North, Inc., each owns separate parcels of land located proximate to the Atlantis. The Atlantis includes casino space, guest rooms and suites, food outlets, espresso and pastry bars, a health spa and salon with an enclosed pool, retail outlets providing clothing and gift shop merchandise, a family entertainment center, and banquet, convention and meeting room space.

MongoDB

MongoDB operates as a general purpose database platform. The company's primary offerings are: MongoDB Enterprise Advanced, which includes the company's proprietary database server, enterprise management capabilities, its graphical user interface, analytics integrations, technical support and a commercial license to its platform; MongoDB Atlas, which provides customers with automated provisioning and healing, system monitoring, managed backup and restore, default security and other features; and Community Server, which is a free-to-download version of the company's database that does not include all of the features of its commercial platform. The company also provides consulting and training to its customers.

NVR Inc.

NVR is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis. The company's homebuilding operations include the construction and sale of single-family detached homes, townhomes and condominium buildings under three trade names: Ryan Homes, which is marketed primarily to first-time and first-time move-up buyers; and NVHomes and Heartland Homes, which are marketed primarily to move-up and luxury buyers. The company's mortgage banking operations also include separate subsidiaries that broker title insurance and perform title searches in connection with mortgage loan closings.

Okta

Okta is an independent identity management platform for the enterprise. The Okta Identity Cloud is the company's platform that enables its customers to connect people to technology, anywhere, anytime and from any device. The Okta Identity Cloud consists of a suite of products to manage and secure identities. Products used for workforce identity are consumed through web and mobile interfaces, and provide ways for Information Technology organizations to manage identities for their employees, contractors and partners. The company's products include: Universal Directory; Single Sign-On; Adaptive Multi-Factor Authentication; Lifecycle Management; and Application Programming Interface Access Management.

Penn National Gaming Inc.

Penn National Gaming is an owner and manager of gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. In addition, the company operates an interactive gaming division through its subsidiary, Penn Interactive Ventures, LLC. The company's segment's properties include Ameristar East Chicago, Hollywood Casino Bangor, 1st Jackpot Casino, Ameristar Vicksburg, Boomtown Biloxi, Boomtown Bossier City, Ameristar Black Hawk, Cactus Petes and Horseshu, Ameristar Council Bluffs, Argosy Casino Alton, Argosy Casino Riverside, Freehold Raceway, Retama Park Racetrack, Sam Houston Race Park and Valley Race Park, and Sanford-Orlando Kennel Club, among others.

Pulte Group

PulteGroup throughg its subsidiaries is engaged in the homebuilding business. The company also has mortgage banking operations, conducted principally through its susidiary, Pulte Mortgage LLC, and title and insurance brokerage operations. The company provides a range of product line to meet the needs of homebuyers in its targeted markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the company provides a range of home designs, including single-family detached, townhouses, condominiums, and duplexes at different prices and with varying levels of options and amenities to its customer groups: first-time, move-up, and active adult.

Red Rock Resorts

Red Rock Resorts is a holding company that manages and owns an indirect equity interest in Station Casinos LLC (Station LLC), through which it conducts all of its operations. Station LLC is a gaming, development and management company that develops and operates casino and entertainment properties. Station LLC owns and operates gaming and entertainment facilities and casinos, providing slot machines, table games and hotel rooms in the Las Vegas regional market. Station LLC also manages Graton Resort & Casino in Sonoma County, California on behalf of a Native American tribe. The company holds an indirect equity interest in Station LLC through its ownership interest in Station Holdco LLC.

Sapiens International Corp. N.V.

Sapiens International is a global provider of software solutions for the insurance industry. Co.'s offerings include a broad range of software solutions and services, comprised of (i) core software solutions for the insurance industry, including Property & Casualty/General Insurance (“P&C”) and Life, Annuities and Pensions (“L&P”) products, and record keeping software solutions for providers of Retirement Services (ii) variety of technology based solution including business decision management solutions for the financial services industry, including insurance, banking and capital markets and (iii) global services including project delivery and implementation of Co.'s software solutions.

SBA Communications

SBA Communications is a holding company. Through its subsidiaries, the company is an owner and operator of wireless communications infrastructure, including tower structures, rooftops, and other structures that support antennas used for wireless communications. The company's operations are in the U.S. and its territories. In its site leasing business, the company leases antenna space to wireless service providers on towers that the company owns or operates and manages rooftop and tower sites for property owners under various contractual arrangements. In its site development business, the company assists wireless service providers in developing and maintaining their own wireless service networks.

Select Sector SPDR-Financial

Select Sector SPDR-Industrial

Smartsheet

Smartsheet is a cloud-based platform for work execution, enabling teams and organizations to plan, capture, manage, automate, and report on work at scale. Customers access their accounts online via a web-based interface or a mobile application. Some customers also purchase the company's other services, which primarily consist of consulting and training services. The company's products are comprised of: Smartdashboards, Smartportals, Smartcards, Smartgrids, Smartprojects, Smartcalendars, Smartforms, Smartautomation, Smartintegrations, Connectors, Control Center, Accelerators, Dynamic View, and Data Uploader.

SPDR Barclays High Yield Bond ETF

SPDR KBW Bank ETF

SPDR S&P Metals & Mining ETF

SPDR S&P Retail ETF

State Street Corp.

State Street is a financial holding company. Through its subsidiaries, the company provides financial products and services to institutional investors. The company has two lines of business: Investment Servicing, which provides, among others, custody, product and participant level accounting, daily pricing and administration, master trust and master custody, depotbank services, record-keeping, cash management, foreign exchange, brokerage and other trading services; and Investment Management, which provides a range of services and solutions, including environmental, social and governance investing, defined benefit and defined contribution and Outsourced Chief Investment Officer.

T. Rowe Price Group Inc.

T Rowe Price Group is a financial service holding company that provides global investment management services through its subsidiaries to investors worldwide. The company provides a range of U.S. mutual funds, separately managed accounts, subadvised funds, and other T. Rowe Price products. In addition to providing investment management services to the U.S. mutual funds, the company's subsidiaries, T. Rowe Price Associates and T. Rowe Price International, provides separately managed institutional investment management and subadvised investment management services to global intermediaries. The company also provides certain administrative services as ancillary services to its investment advisory clients.

The Blackstone Group Inc

Toll Brothers Inc.

Toll Brothers designs, builds, markets, sells, and arranges financing for detached and attached homes in residential communities. The company caters to move-up, empty-nester, active-adult, and second-home buyers in the U.S. The company also designs, builds, markets, and sells homes in urban infill markets through Toll Brothers City Living?. The company also operates its own security company, TBI Smart Home Solutions, which provides home automation and technology options. In addition, the company operates its own lumber distribution, house component assembly, and manufacturing operations. In addition to its residential for-sale business, the company also develops and operates for-rent apartments primarily through joint ventures.

Twilio

Twilio provides a cloud communications platform that enables developers to build, scale and operate communications within their software applications via the company's Application Programming Interfaces (APIs). The company's platform consists of three layers: Engagement Cloud, which provides functionality for a specific purpose, such as two-factor authentication or a contact center; Programmable Communications Cloud, which provides a range of products that enables developers to embed voice, messaging and video capabilities into their applications; and Super Network, which contains a set of API's giving the company's customers access to components of its platform.

Workday

Workday is a provider of enterprise cloud applications for finance and human resources. The company's products include: Workday Financial Management, an application with financial capabilities, analytics and metrics, and auditable process management; and Workday Human Capital Management, which includes global human resources management (workforce lifecycle management, organization management, compensation, absence, and employee benefits administration) and global talent management (goal management, performance management, succession planning, and career and development planning). The company's other solutions include Adaptive Insights Business Planning Cloud, as well as Workday Data-as-a-Service.

Zendesk

Zendesk is a software development company that provides software as a service products to help organizations and their customers build better experiences. The company's family of products include: Zendesk Support, which provides organizations with the ability to track, prioritize, and solve customer support tickets; Zendesk Chat, which is a live chat software; Zendesk Talk, which is a cloud-based call center software for phone and SMS support conversations; Zendesk Guide, which is a knowledge base that powers both customer self-service and support agent productivity; Zendesk Explore, which provides analytics for businesses; and Zendesk Sell, which is a sales force automation software.

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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