Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.57 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

MPC, PSX, VLO, DINO, PBF, CVI, DK, ESNT, MTG, RDN, NMIH, BRK.B, CB, MKL, CINF, ERIE, CNA, LII, FIX CSWI

Upgrading Financials to Market Weight

Fitch's U.S. credit downgrade has done little to change the intermediate-term trend; we continue to believe the path of least resistance is higher for the major equity indexes, which has been our stance since our 5/30/23 ETF Pathfinder. We remain bullish on the S&P 500, and we expect to see support at its 50-day MA moving forward (currently 4415). Short term supports we are watching include 4460-4475 on the S&P 500, $371.50 on the Nasdaq 100 (QQQ), and $190-193 on the Russell 2000 (IWM); as long as these levels hold, this pullback is likely to be contained... see page 3. Longer-term support on the S&P 500 is at 4300-4325 and 4200. Under the surface we are seeing rotation from growth to value Sectors (more on that below).

Upgrading Financials to Market Weight; Shift to Value Continues. We are upgrading Financials to market weight; RS on the XLF
Underlyings
Chubb Limited

CI Global Infrastructure Private Pool

CNA Financial Corporation

CNA Financial is an insurance holding company. The company's property and casualty and remaining life and group insurance operations are primarily conducted by its subsidiaries. The company's insurance products primarily include commercial property and casualty coverages, including surety. The company's services include warranty, risk management information services and claims administration. The company's commercial property and casualty underwriting operations in the United States consists of field underwriting locations and centralized processing operations which handle policy processing, billing and collection activities and also act as call centers to support service.

Comfort Systems USA Inc.

Comfort Systems USA provides mechanical contracting services, which include heating, ventilation and air conditioning (HVAC), plumbing, piping and controls, as well as off-site construction, electrical, monitoring and fire protection. The company provides construction, renovation, expansion, maintenance, repair and replacement services for mechanical and related systems in commercial, industrial and institutional properties. The company's installation business related to newly constructed facilities involves the design, engineering, integration, installation and start-up of mechanical and related systems. The company also provides remote monitoring of temperature, pressure, humidity and air flow for HVAC systems.

CSW Industrials

CSW Industrials is an industrial company. The company operates in two business segments: Industrial Products, which consists of mechanical products, fire and smoke protection products, architecturally-specified building products, and storage, filtration and application equipment for use with its chemicals and other products for general industrial applications; and Specialty Chemicals, which manufactures and supplies consumables that impart or improve properties such as lubricity, anti-seize qualities, friction, sealing and heat control, as well as penetrants, pipe thread sealants, firestopping sealants and caulks and adhesives/solvent cements, which are primarily manufactured internally.

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.

Erie Indemnity Company Class A

Erie Indemnity is an attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange), a reciprocal insurer that writes property and casualty insurance. The company's main function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. The company also acts as attorney-in-fact on behalf of the Exchange with respect to claims handling and investment management services, as well as the service provider for the claims handling, life insurance, and investment management services for its insurance subsidiaries. The company provides policy issuance and renewal services related to the sales, underwriting and issuance of policies.

Essent Group Ltd.

HOLLYFRONTIER CORP

Lennox International Inc.

Lennox International provides climate control solutions. The company designs, manufactures and markets products for the heating, ventilation, air conditioning and refrigeration markets. The company's segments are: Residential Heating and Cooling, which manufactures and markets furnaces, air conditioners, heat pumps, packaged heating and cooling systems, equipment and accessories, comfort control products, and replacement parts and supplies; Commercial Heating and Cooling, which manufactures and sells unitary heating and cooling equipment; and Refrigeration, which manufactures and markets equipment for the global commercial refrigeration markets under the Heatcraft Worldwide Refrigeration name.

Madison Pacific Properties Inc. Cl B

Madison Pacific Properties is engaged in owning, developing and operating industrial and commercial real estate properties located in British Columbia. As of Dec 31 2010, Co.'s property portfolio was comprised of interests in 1,152,358 sq. ft. of net rentable area of industrial properties, 190,383 sq.ft. of net rentable area of retail/highway commercial properties, and 59,080 sq.ft. of net rentable area of office property for a combined total of 1,401,821 sq. ft.

Markel Corporation

Markel is a financial holding company. The company's business operations are: Underwriting, which comprised of risk-bearing insurance and reinsurance operations; Investing, which is primarily related to underwriting operations; Markel Ventures, Inc., includes controlling interests in a portfolio of businesses that operate outside of the specialty insurance marketplace; Insurance-linked securities, which include investment fund managers that provide investment products, including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives; and Program services, which serves as a fronting platform that provides access to property and casualty insurance market.

MGIC Investment Corporation

MGIC Investment is a holding company. Through Mortgage Guaranty Insurance Corporation, the company is engaged in the mortgage insurance business. The company provides mortgage insurance to lenders throughout the U.S. and to government sponsored entities. Primary insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure or sale approved by the company Through certain other non-insurance subsidiaries, the company also provides various services for the mortgage finance industry, such as contract underwriting, analysis of loan originations and portfolios, and mortgage lead generation.

NMI Holdings Inc. Class A

NMI Holdings is an insurance holding company. Through its subsidiaries, the company is engaged in the provision of mortgage insurance (MI). MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage. The company's principal types of MI coverage include: primary MI, which provides default protection on individual mortgage loans at specified coverage percentages; and pool insurance, which is generally used to provide additional credit enhancement for certain secondary market mortgage transactions. The company also provides outsourced loan review services to mortgage originators through its subsidiary, NMI Services, Inc.

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.

Radian Group Inc.

Radian Group is a holding company. Through its subsidiaries, the company provides mortgage insurance and products and services to the real estate and mortgage finance industries through its two business segments: Mortgage Insurance and Services. The company's Mortgage Insurance segment provides credit-related insurance coverage, principally through private mortgage insurance, as well as other credit risk management solutions, to mortgage lending institutions and mortgage credit investors. The company's Services segment is primarily a fee-for-service business that provides an array of real estate, title and mortgage services to market participants across the mortgage and real estate value chain.

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.

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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