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

MSCI Emerging Markets Index / Technical Analysis

<ul>
<li>In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. </li>
<li>The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).</li>
<li>The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).</li>
</ul>


In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. 
The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).
The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).


MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one contributing factor.</li>
<li>UMC and ChipMOS ADRs are trading at discounts that are unlikely to last much longer given the historical trading behavior.</li>
<li>Chunghwa Telecom ADRs are trading at a discount - If the ADRs drop in today's U.S. trading then will open up a historically rare discount.</li>
</ul>


TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one contributing factor.
UMC and ChipMOS ADRs are trading at discounts that are unlikely to last much longer given the historical trading behavior.
Chunghwa Telecom ADRs are trading at a discount - If the ADRs drop in today's U.S. trading then will open up a historically rare discount.


Taiwan Dual-Listings: Taiwan Exchange Holiday Opens Up Potential Spread Opportunities

<ul>
<li>We're now two-thirds through the Taiwan Semiconductor earnings season and about one-third through the Taiwan Hardware earnings season.</li>
<li>Semiconductor gross margins declines have been relatively large, and we believe are tracking to be worse than what consensus expected going into the earnings season.</li>
<li>There have been few examples of inventory situations improving for semicondcutor companies; results data released so far indicates a potentially deeper trough than previously expected.</li>
</ul>


We're now two-thirds through the Taiwan Semiconductor earnings season and about one-third through the Taiwan Hardware earnings season.
Semiconductor gross margins declines have been relatively large, and we believe are tracking to be worse than what consensus expected going into the earnings season.
There have been few examples of inventory situations improving for semicondcutor companies; results data released so far indicates a potentially deeper trough than previously expected.


Taiwan Semiconductors Mid-Earnings Season Review: Margins, Inventories Appear Worse Than Expected

<ul>
<li>TSMC - Premium holding up despite Berkshire investment sale news. We maintain a model on the company.</li>
<li>UMC - ADR now trading at a discount. Pretty clear opportunity for a reversion back to a premium.</li>
<li>ChipMOS - At parity, results coming February 23rd. We maintain a model on the company.</li>
</ul>


TSMC - Premium holding up despite Berkshire investment sale news. We maintain a model on the company.
UMC - ADR now trading at a discount. Pretty clear opportunity for a reversion back to a premium.
ChipMOS - At parity, results coming February 23rd. We maintain a model on the company.


Taiwan Dual-Listings: TSMC Premium Holding Despite Buffett Exit, UMC Discount Opens Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).</li>
<li>ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.</li>
<li>Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?</li>
</ul>


This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).
ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.
Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?


Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround

Taiwan

ASE Technology Holding Co., Ltd. offers assembly and testing services. The Company provides outsourced assembly, semiconductor testing, semiconductor packaging, and other related services. ASE Technology Holding operates in Taiwan.

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ASE Technology Holding (3711 TT)

MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Signs continue to point to a topping $DXY, and a declining DXY has historically resulted in EM outperformance (vs. $EAFE). Many ideas in China/Hong...

Vermilion Research

Taiwan Dual-Listings: Taiwan Exchange Holiday Opens Up Potential Spread Opportunities

TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one...

Vincent Fernando, CFA

Taiwan Semiconductors Mid-Earnings Season Review: Margins, Inventories Appear Worse Than Expected

Other than comments from some companies saying they expect a 2H23E recovery in their guidance, results data released this season so far indicates a...

Vincent Fernando, CFA

Taiwan Dual-Listings: TSMC Premium Holding Despite Buffett Exit, UMC Discount Opens Up

TSMC - Premium holding up despite Berkshire investment sale news. We maintain a model on the company. UMC ADR discount represents a decent...

Vincent Fernando, CFA

Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround

Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus...

Vincent Fernando, CFA

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