Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Despite recent weakness across global markets, our weight of the evidence approach continues to lead us to the same conclusions as we posited in our 1/24/20 and 1/30/20 Int’l Compass reports: we continue to believe this is a bull market until proven otherwise, and a “buy the dip” strategy remains warranted. In our February International Strategy, we highlight various themes which lead to our bullish outlook, and offer several attractive opportunities we are seeing in the global health care and technology sectors..

Despite recent weakness across global markets, our weight of the evidence approach continues to lead us to the same conclusions as we posited in our 1/24/20 and 1/30/20 Int’l Compass reports: we continue to believe this is a bull market until proven otherwise, and a “buy the dip” strategy remains warranted. In our February International Strategy, we highlight various themes which lead to our bullish outlook, and offer several attractive opportunities we are seeing in the global health care and technology sectors..

As we head into Q4 earnings season we remain bullish on the broad market. Our bullish outlook is supported by the themes highlighted in this report.  In addition, we highlight attractive Groups and stocks within Discretionary and Technology: Casinos &amp; Gaming, Large-Cap, Semiconductors, Mid-Cap, Semiconductors, Small-Cap, Software, Design Solutions.

As we head into Q4 earnings season we remain bullish on the broad market. Our bullish outlook is supported by the themes highlighted in this report.  In addition, we highlight attractive Groups and stocks within Discretionary and Technology: Casinos &amp; Gaming, Large-Cap, Semiconductors, Mid-Cap, Semiconductors, Small-Cap, Software, Design Solutions.

U.S. Equity Strategy: Growth Surging Relative to Value

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Thematic (Sector/Industry)

Macau printed much better than expected June GGR of 5.9% YoY, due to a combination of positive factors:  1) one big spender in VIP room rolled as much as ~10 bn HKD in June (either the guy or the junket operator should have gone bankrupt but the operator is still in business so we estimate that the player lost lots of money so unlikely to return Macau soon); 2) both VIP and mass segments were negatively impacted by 2018 World Cup Russia from June 14 to Jul 15, setting low comp for June 2019; 3) unprecedented HK protests in scale and duration starting on June 9th turned off mainland tourists who consequently have deprioritized HK as an outbound destination, shifting demand to Macau.

Macau printed much better than expected June GGR of 5.9% YoY, due to a combination of positive factors:  1) one big spender in VIP room rolled as much as ~10 bn HKD in June (either the guy or the junket operator should have gone bankrupt but the operator is still in business so we estimate that the player lost lots of money so unlikely to return Macau soon); 2) both VIP and mass segments were negatively impacted by 2018 World Cup Russia from June 14 to Jul 15, setting low comp for June 2019; 3) unprecedented HK protests in scale and duration starting on June 9th turned off mainland tourists who consequently have deprioritized HK as an outbound destination, shifting demand to Macau. 

Macau Update: Individual Whale Boosting June VIP; WC 2018 Low Base, Mass Benefiting from HK Protests

While the S&amp;P 500 has hit marginal new highs, price action of the S&amp;P 500 and the price and RS of several Sectors/subsectors is similar to the periods leading up to the October 2018 and May 2019 breakdowns. We draw several similarities in today’s report, and we continue to believe upside is likely to be muted from here barring additional positive developments.

While the S&amp;P 500 has hit marginal new highs, price action of the S&amp;P 500 and the price and RS of several Sectors/subsectors is similar to the periods leading up to the October 2018 and May 2019 breakdowns. We draw several similarities in today’s report, and we continue to believe upside is likely to be muted from here barring additional positive developments.

U.S. Equities: Mixed Signals Punctuate Muted Outlook

Our checks indicate that during the first 5 days in May, Macau GGR reached ~1 billion MOP, up by HDD (high-double-digits) year-over-year. This was driven by the extra one day for the labor-day holiday this year, strong mass visitations from mainland and very high VIP rolling.  We estimate that the average rolling amount in VIP rooms reached ~5.5 billion -6.0 billion MOP per day per table, up ~15% YoY (same period in 2018).  The extra day provided in the holiday is to stimulate consumer spending by the government, a similar measure as the income tax cut effective on Oct 1st, 2018.In April, Macau GGR was down 8.3% YoY, dragged down by ~25% decline in VIP GGR.  The VIP luck factor was ~3% last minute, similar to same period in 2018.  Rolling demand was negatively impacted by Beijing’s tightened implementation of capital outflow controls, and crackdown of underground banking and related crimes.

Our checks indicate that during the first 5 days in May, Macau GGR reached ~1 billion MOP, up by HDD (high-double-digits) year-over-year. This was driven by the extra one day for the labor-day holiday this year, strong mass visitations from mainland and very high VIP rolling.  We estimate that the average rolling amount in VIP rooms reached ~5.5 billion -6.0 billion MOP per day per table, up ~15% YoY (same period in 2018).  The extra day provided in the holiday is to stimulate consumer spending by the government, a similar measure as the income tax cut effective on Oct 1st, 2018.In April, Macau GGR was down 8.3% YoY, dragged down by ~25% decline in VIP GGR.  The VIP luck factor was ~3% last minute, similar to same period in 2018.  Rolling demand was negatively impacted by Beijing’s tightened implementation of capital outflow controls, and crackdown of underground banking and related crimes. 

Macau Gaming: Strong Labor Day Holiday GGR

Hong Kong

Melco Resorts & Entertainment Limited is a developer, owner, and operator of integrated resorts with entertainment and casino gaming facilities across Asia and Europe. The company's portfolio includes properties such as City of Dreams Macau, Altira Macau, Studio City Macau, City of Dreams Manila, and City of Dreams Mediterranean, as well as the Mocha Clubs slot machine brand. Incorporated in 2004, the company is headquartered in Hong Kong.

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Melco Resorts & Entertainment (MLCO US)

Global Equity Strategy: Buy the Dips

Despite recent weakness across global markets, our weight of the evidence approach continues to lead us to the same conclusions as we posited in...

Vermilion Research

U.S. Equity Strategy: Growth Surging Relative to Value

As we head into Q4 earnings season we remain bullish on the broad market. Our bullish outlook is supported by the themes highlighted in this...

Vermilion Research

Macau Update: Individual Whale Boosting June VIP; WC 2018 Low Base, Mass Benefiting from HK Protests

Macau printed much better than expected June GGR of 5.9% YoY, due to a combination of positive factors: 1) one big spender in VIP room rolled as...

JL Warren Capital

U.S. Equities: Mixed Signals Punctuate Muted Outlook

While the S&P 500 has hit marginal new highs, price action of the S&P 500 and the price and RS of several Sectors/subsectors is similar to...

Vermilion Research

Macau Gaming: Strong Labor Day Holiday GGR

Our checks indicate that during the first 5 days in May, Macau GGR reached ~1 billion MOP, up by HDD (high-double-digits) year-over-year. This was...

JL Warren Capital

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