Report
Dave Nicoski ...
  • Ross LaDuke
EUR 48.56 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Correction Over?

Important price support levels previously highlighted have held strong, including the 3200-3230 level on the S&P 500, 10,855 on the Nasdaq 100, and $145/the 200-day MA on the Russell 2000 (IWM). Additionally, both the S&P 500 and Nasdaq 100 are breaking out from their bullish falling wedge patterns that have been taking shape since the early-September highs. These bullish inflections are encouraging and, combined with market dynamics which remain mostly healthy, lead us to believe the lows of this recent correction are likely in.

· Key Levels. Support levels highlighted above on the S&P 500, Nasdaq 100, and Russell 2000 (IWM) remain paramount; arrows are pointing up as long as they hold. On the other hand, breakdowns would tell us the market is still in a corrective phase and would need to explore lower prices. Resistance levels to watch include 3425 on the S&P 500 and 11,500 on the Nasdaq 100; breakouts above these levels would only strengthen our already constructive outlook... see charts below and on page 6.

· Sector Relative Strength Rankings & Weighting Recommendations. Cap-weighted Technology (XLK) and Communications (XLC) are making bullish short-term price and RS inflections, a bullish sign. Additionally, cyclical Sectors including Materials, Transportation, Discretionary, and Manufacturing continue to have bullish price and RS trends while defensive areas including Utilities, Staples, and Real Estate are devoid of bullish RS inflections. Leadership from cyclicals and underperformance from defensives are hallmarks of any healthy bull market... see pages 2-4.

· Big Picture Trends. Banks appear to be stabilizing at logical support. The small vs. large-cap ratio remains above key support, as does the Bloomberg Commodity index. The 10-year Treasury yield remains above 0.62% support. All of these observations suggest a generally positive market environment. We are also watching the US dollar (DXY) closely; it broke above 94 resistance, but that failed to rattle the equity market and the DXY is still below bigger resistance at 95 and 96.
Underlyings
Ballard Power Systems Inc.

Ballard Power Systems is engaged in the design, development, manufacture, sale and service of proton exchange membrane fuel cell products for a variety of applications, focusing on the power product markets of Heavy-Duty Motive (consisting of bus, truck, rail and marine applications), Portable Power, Material Handling and Backup Power, as well as the delivery of Technology Solutions, including engineering services, technology transfer and the license and sale of Co.'s intellectual property portfolio and fundamental knowledge for a variety of fuel cell applications. A fuel cell is an electrochemical device that combines hydrogen fuel with oxygen (from the air) to produce electricity.

Bloom Energy

Bloom Energy designs, manufactures, and sells solid-oxide fuel cell systems, or Energy Servers, for on-site power generation. The company's Energy Servers utilize a fuel cell technology. The company's solution, the Bloom Energy Server, is a stationary power generation platform. The Bloom Energy Server converts standard low-pressure natural gas or biogas into electricity through an electrochemical process without combustion.

Boyd Gaming Corporation

Boyd Gaming is a multi-jurisdictional gaming company. The company operates owned gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. The company has three reportable business segments: Las Vegas Locals, which includes casinos that primarily serve the resident population of the Las Vegas metropolitan area; Downtown Las Vegas, 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. The company also operates a travel agency and a captive insurance company that underwrites travel-related insurance.

Caesars Entertainment Corporation

Caesars Entertainment is a holding company that provides casino-entertainment and hospitality services. The company's facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. In addition to its brick and mortar assets, the company operates an online gaming business that provides real money games in certain jurisdictions and provides retail sports wagering in certain jurisdictions. The company's consolidated business is composed of five complementary businesses: casino entertainment, food and beverage, rooms and hotel, casino management services, and entertainment and other business operations, including mobile sports betting.

Canadian Solar Inc.

Century Casinos Inc.

Century Casinos is an international casino entertainment company that develops and operates gaming establishments as well as related lodging, restaurant, horse racing and entertainment facilities. The company owns casino operations in North America and England; develops a racetrack and entertainment center (REC) in Edmonton, Canada; holds interest in casino licenses throughout Poland; holds interest in a REC in Calgary, Canada, and the pari-mutuel off-track betting network in southern Alberta, Canada; manages cruise ship-based casinos on international waters; manages a hotel, entertainment and gaming club in Vietnam through a majority-owned subsidiary, and provides gaming services in Argentina.

Churchill Downs Incorporated

Churchill Downs is a racing, online wagering and gaming entertainment company. The company manages its operations through three reportable segments: Churchill Downs, Online Wagering, and Gaming. Churchill Downs includes live and historical pari-mutuel racing at Churchill Downs Racetrack and Derby City Gaming. Online Wagering includes the company's TwinSpires business and its online sports betting and iGaming business. Gaming includes casino properties and associated racetrack or jai alai facilities which support the casino license as applicable.

eGain

eGain is a provider of cloud-based customer engagement software with operations in the United States, United Kingdom and India. The company's suite includes applications for digital interaction, knowledge management, and artificial intelligence-based process guidance. The company also provides integrated analytics for contact centers and digital properties to measure, manage, and support resources. The company's eGain solution provides a unified cloud software solution to automate, augment and orchestrate customer engagement in a digital omnichannel world. The company's feature portfolio of applications allows businesses to continuously support the activity for agents, business and customers.

Enphase Energy Inc.

Enphase Energy is a global energy technology company. The company designs, develops, manufactures and sells home energy solutions that connect energy generation, energy storage and control and communications management on one platform. The company's semiconductor-based microinverter converts energy at the individual solar module level and, combines with its proprietary networking and software technologies to provide energy monitoring and control. The Enphase Home Energy Solution with IQ consists of four primary components: Enphase microinverters, the AC Battery?, an Envoy gateway, and Enlighten cloud-based software.

First Solar Inc.

First Solar is a provider of photovoltaic (PV) solar energy solutions. The company designs, manufactures and sells PV solar modules with a thin film semiconductor technology, and also develops and sells PV solar power systems that mainly use the modules it manufactures. The company also provides operations and maintenance (O&M) services to system owners. The company's modules segment involves the design, manufacture and sale of cadmium telluride solar modules, which convert sunlight into electricity. The company's second segment is its systems segment, through which it provides power plant solutions, which include project development, engineering, procurement, and construction services and O&M services.

Five9 Inc.

Five9 is a provider of cloud software for contact centers. The company's Virtual Contact Center (VCC), cloud platform and applications, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through its application programming interfaces. The company's VCC cloud platform matches each customer interaction with an appropriate agent resource and delivers customer data to the agent in real-time through integrations with adjacent enterprise applications, such as customer relationship management software. The company provides its solution through a software-as-a-service business model with recurring subscriptions.

HubSpot Inc.

HubSpot provides a cloud-based marketing, sales, and customer service software platform, which it refers to as its Growth Platform. The company's Growth Platform features integrated applications that create an adaptable customer experience. These integrated applications include a CRM, search engine optimization, blogging, website content management, messaging, chatbots, social media, marketing automation, email, predictive lead scoring, sales productivity, ticketing and helpdesk tools, customer NPS surveys, analytics, and reporting. The company also provides other services, which primarily consist of customer on-boarding and training services.

JinkoSolar Holding Co. Ltd. Sponsored ADR

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.

Nuance Communications Inc.

Nuance Communications provides conversational artificial intelligence (AI). The company provides its customers automated speech recognition, natural language understanding capabilities, dialog and information management, biometric speaker authentication, text-to-speech, and domain knowledge, along with services and implementation support. The company's segments are: healthcare, which provides intelligent systems that support approach to clinical documentation; enterprise, which provides AI-powered intelligent customer engagement solutions and services; automotive, which provides assistants and connected services for cars; and other, which includes the company's Subscriber Revenue Services and Devices businesses.

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.

Plug Power Inc.

Plug Power is a provider of alternative energy technology focused on the design, development, commercialization and manufacture of hydrogen and fuel cell systems used for the material handling and stationary power markets. The company's products and services include: GenDrive, which is a hydrogen fueled proton exchange membrane fuel cell system providing power to material handling electric vehicles, electric forklifts and ground support equipment; GenFuel, which is a hydrogen fueling delivery, generation, storage and dispensing systems; and ProGen, which is a fuel cell stack and engine technology that used in mobility and stationary fuel cell systems, and as engines in electric delivery vans.

Red Rock Resorts Inc. Class A

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.

Salesforce.com inc.

Salesforce.Com is engaged in customer relationship management technology. The company's Customer 360 is an integrated platform that unites sales, service, marketing, commerce, integration, analytics and more to give companies a single, shared view of their customers. Through its platform and other developer tools, the company also enables third parties to develop additional functionality and applications, or apps, that run on its platform, which are sold separately from or in conjunction with the company's service offerings. The company's cloud service offerings include sales cloud, service cloud, marketing and commerce cloud, and salesforce platform and other.

Sky Solar Holdings ADR

SolarEdge Technologies Inc.

SolarEdge Technologies designs, develops, and sells an intelligent inverter solution designed for power generation at the individual photovoltaic module level. The company's products consist mainly of power optimizers designed to maximize energy throughput from each and every module via constant tracking of Maximum Power Point individually per module; inverters, which invert direct current from the PV module to alternating current; a related cloud-based monitoring platform; and a storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed.

SunPower Corporation

SunPower is a holding company. Through its subsidiaries, the company is an energy company that delivers solar solutions to residential, commercial, and power plant customers worldwide. The company has two segments: SunPower Energy Services, which refers to sales of solar energy solutions in the North America including direct sales of turn-key engineering, procurement and construction services, and sales to resellers, among other; and SunPower Technologies, which refers to its technology development, worldwide solar panel manufacturing operations, equipment supply to resellers, commercial and residential end-customers outside of North America, and worldwide power plant project development and project sales.

Sunrun Inc.

Sunrun is engaged in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems. The company's main solar service offerings are provided through its lease and power purchase agreements, which it refers to as its Customer Agreements. While homeowners have the option to purchase a solar energy system outright from the company, a majority of its customers choose to buy solar as a service through its Customer Agreements. With its solar service offerings, the company installs solar energy systems on its customers' homes and provides them the solar power produced by those systems. In addition, the company monitors, maintains and insures the system during the term of the contract.

Vivint Solar

Vivint Solar is engaged in providing distributed solar energy, which is electricity generated by a solar energy system installed at or near customers' locations, to residential customers through a direct-to-home sales model. The company's product offering include: Power Purchase Agreements, in which the company charges customers a fee per kilowatt hour based on the electricity production of the solar energy system, which is billed monthly; Legal-form Leases, in which the company charges customers a fixed monthly payment to lease the solar energy system; and Solar Energy System Sales, in which the company provides its customers the option to purchase solar energy systems for cash or through third-party financing.

Zendesk Inc.

Zendesk is a software development company that provides software as a service solutions. The company's product solutions 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 short message service 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 organizations; and Zendesk Sell, which is a sales customer relationship management product solution.

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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