Report
Dave Nicoski ...
  • Ross LaDuke
EUR 47.72 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Breakout Brewing?

With the 3200-3230 support level holding strong on the S&P 500, we remain constructive over the intermediate-term as outlined in our 11/3/20 Compass. Considering current market dynamics we see eventual decisive breakouts as the most likely outcome for the major averages, which justifies our positive outlook. At the same time, with the S&P 500, Russell 2000, and Nasdaq 100 climbing 7-12% in just over a week and all three testing logical resistance, we believe there is potential for some near-term backing-and-filling. Continue to buy dips.

· Testing Resistance. Both the S&P 500 and Russell 2000 hit new all-time intraday highs at the open yesterday, but this was met with selling pressure throughout the day as breakouts were rejected. Short-term levels we are watching on the S&P 500 include resistance at 3588 and support in the 3521-3547 range... see charts below.

· Sector Relative Strength Rankings & Weighting Recommendations. Last week we noted that Energy was the only Sector in a downtrend -- that is, until now. With bullish short-term price and RS reversals on cap- and equal-weighted Energy (XLE and RYE), we have the Sector on watch for a potential upgrade... see pages 2-3.

· WTI Crude Oil; 10-Year Treasury Yield; US Dollar; Big EM Breakout. One reason we are hesitant to upgrade the Energy Sector is because WTI crude oil remains below important resistance at $41.50-42. Additionally, the 10-year Treasury yield is testing the important 0.95% resistance level; a breakout above this level would make cyclical value Sectors like Energy and Financials all the more attractive. The US dollar (DXY) is testing key support at 92; a break below this level would provide a risk-on signal for global equities and would be a tailwind for commodity prices. Speaking of risk-on signals, we are getting a big one from emerging market equities, as the EEM ETF displays a big breakout above $46.30 resistance.
Underlyings
Australia & New Zealand Banking Group Ltd (ADR)

Community Health Systems Inc.

Community Health Systems is a holding company. Through its subsidiaries, the company operates general acute care hospitals and outpatient facilities. The company provides healthcare services through the hospitals that it owns and operates and affiliated businesses in non-urban and selected urban markets. Services provided through the company's hospitals and affiliated businesses include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. The company also provides additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

DaVita Inc.

DaVita is a healthcare provider focused on transforming care delivery to improve quality of life for patients. The company's United States dialysis business provides kidney dialysis services for patients suffering from end stage renal disease (ESRD). The company's dialysis services include outpatient hemodialysis services, hospital inpatient hemodialysis services, home-based dialysis services, ESRD laboratory services, and management services. The company's ancillary services and strategic initiatives businesses include disease management services, physician services, ESRD Seamless Care Organization joint ventures, clinical research programs, vascular access services, as well as international dialysis operations.

Encompass Health Corporation

Encompass Health is a provider of healthcare services, providing both facility-based and home-based patient care through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. The company's inpatient rehabilitation hospitals provide specialized rehabilitative care across an array of diagnoses and deliver patient care services. The company's home health agencies provide home care services such as skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services. The company also provides hospice services such as pain control and symptom management, and emotional and spiritual support to terminally ill patients and their families.

Ensign Group Inc.

Ensign Group is a holding company. Through its operating subsidiaries, the company provides skilled nursing, senior living and rehabilitative services, as well as other ancillary businesses. In transitional and skilled services, the company provides short and long-term nursing care services for patients with chronic conditions, prolonged illness, and the elderly. The company's senior living companies provide residential accommodations, activities, meals, housekeeping and assistance in the activities of daily living to seniors who are independent or who require some support, but not the level of nursing care provided in a skilled nursing operation. The company's other business lines includes of mobile ancillary services.

Fresenius Medical Care AG & Co. KGaA ADS

Hanger

Hanger provides orthotic and prosthetic (O&P) services, distributes O&P devices and components, manages O&P networks and provides therapeutic solutions to patients and businesses in acute, post-acute and clinic settings. The company operates through two segments: Patient Care and Products & Services. The company's Patient Care is comprised of Hanger Clinic, which focuses the design, fabrication and delivery of custom O&P devices. The company also provides payor network contracting services to other O&P providers through this segment. The company's Products and Services manufactures and sells therapeutic footwear for diabetic patients in the podiatric market through its subsidiary, SureFit Shoes, LLC.

HCA Healthcare Inc

HCA Healthcare is a holding company. Through its subsidiaries, partnerships and joint ventures, the company owns and operates hospitals and related health care entities. Most of the company's general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. The company's psychiatric hospitals provide therapeutic programs including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling.

HDFC Bank Limited Sponsored ADR

ICICI Bank Limited Sponsored ADR

KB Financial Group Inc. ADS

Mitsubishi Tokyo Financial Group ADS

National Australia Bank Ltd. ADS

Orix Corp. ADS

Republic Services Inc.

Republic Services is a provider of non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States. The company operates through collection operations, transfer stations, active landfills, recycling processing centers, treatment, recovery and disposal facilities, salt water disposal wells, and deep injection wells. In addition, the company is engaged in landfill gas-to-energy and renewable energy projects and had post-closure responsibility for closed landfills. The company's operations primarily consist of providing collection, transfer and disposal of non-hazardous solid waste, recovering and recycling of certain materials, and environmental services.

Select Medical Holdings Corporation

Select Medical Holdings is managed through four business segments: critical illness recovery hospital, which consists of hospitals designed to serve the needs of patients recovering from critical illnesses; rehabilitation hospital, which consists of hospitals designed to serve patients that require intensive physical rehabilitation care; outpatient rehabilitation, which consists of clinics that provide physical, occupational, and speech rehabilitation services; and the company's subsidiary, Concentra Inc. segment, which consists of occupational health centers that provide workers' compensation injury care, physical therapy, and consumer health services and onsite clinics.

Shinhan Financial Group Co. Ltd.

Stericycle Inc.

Stericycle is engaged in the medical and hazardous waste management and secure information services. The company's segments are: North America, and International Regulated Waste and Compliance Services, which provides medical waste management services, pharmaceutical waste services, compliance programs, retail and healthcare, industrial and manufacturing hazardous waste management and secure information destruction; and Domestic Communication and Related Services, which provides appointment reminders, secure messaging, event registration, and other communications mainly for hospitals and integrated delivery network's as well as regulated recall and returns management communication, and logistics.

Sumitomo Mitsui Financial Group Inc. (ADS)

Surgery Partners Inc.

Surgery Partners is a holding company. Through its subsidiaries, the company is a healthcare services company. The company operates in three reporting segments : Surgical Facility Services, which consists of the operation of ambulatory surgery centers (ASCs) and surgical hospitals; Ancillary Services, which consists of a diagnostic laboratory and multi-specialty physician practices; and Optical Services, which consists of an optical laboratory and an optical products group purchasing organization. As of Dec 31 2017, the company owned or operated primarily in partnership with physicians, a portfolio of 124 surgical facilities comprised of 106 ASCs and 18 surgical hospitals across 32 states.

Tenet Healthcare Corporation

Tenet Healthcare is a healthcare services company. Through its subsidiaries, partnerships and joint ventures, including USPI Holding Company, Inc., the company operates hospitals, surgical hospitals and outpatient centers. In addition, the company's Conifer Holdings, Inc. (Conifer) subsidiary provides healthcare business process services in the areas of hospital and physician revenue cycle management and care solutions to healthcare systems, as well as individual hospitals, physician practices, self-insured organizations, health plans and other entities. The company has three reportable segments: Hospital Operations and other; Ambulatory Care; and Conifer.

U.S. Physical Therapy Inc.

U.S. Physical Therapy, through its subsidiaries, operates outpatient physical therapy clinics that provide pre-and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, treatment for neurological-related injuries and rehabilitation of injured workers. The company operates through subsidiary clinic partnerships. To a lesser extent, the company operates some clinics through wholly-owned subsidiaries under profit sharing arrangements with therapists. The company has a majority interest in a company, which is a provider of industrial injury prevention. Services provided include onsite injury prevention and rehabilitation, performance optimization and ergonomic assessments.

Universal Health Services Inc. Class B

Universal Health Services owns and operates, through its subsidiaries, acute care hospitals and outpatient facilities and behavioral health care facilities. The company owns and/or operates inpatient facilities and outpatient and other facilities located in several states including, Washington, D.C., the United Kingdom, and Puerto Rico. Services provided by the company's hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. The company's reportable operating segments consist of acute care hospital services and behavioral health care services.

Waste Connections Inc.

Waste Connections is a solid waste services company in North America, providing waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the U.S. and Canada. Through its R360 Environmental Solutions subsidiary, Co. is also a provider of non-hazardous exploration and production (E&P), waste treatment, recovery and disposal services in several of the natural resource producing areas in the U.S. Co. also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities.

Waste Management Inc.

Waste Management is a holding company. Through its subsidiaries, the company is a provider of waste management environmental services. The company partners with its residential, commercial, industrial and municipal customers and the communities it serves to manage and reduce waste at each stage from collection to disposal, while recovering resources and creating renewable energy. The company's Solid Waste business is operated and managed by its subsidiaries that focus on various geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through its subsidiaries, the company is also a developer, operator and owner of landfill gas-to-energy facilities.

Westpac Banking Corp. ADS

Woori Bank ADR

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