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

US Treasury (10 Yr Generic) / Technical Analysis

<ul>
<li>We continue to expect the 4165-4200 level to cap upside on the S&amp;P 500, but cannot rule out a trip to 4300-4325 (August 2022 highs)</li>
<li>Either way, we continue to preach caution and believe that upside is limited on the market indexes.</li>
<li>Treasury yields are starting to reverse above multi-month downtrends, and we are monitoring for similar reversals on the U.S. dollar (DXY) and high yield spreads.</li>
</ul>


We continue to expect the 4165-4200 level to cap upside on the S&amp;P 500, but cannot rule out a trip to 4300-4325 (August 2022 highs)
Either way, we continue to preach caution and believe that upside is limited on the market indexes.
Treasury yields are starting to reverse above multi-month downtrends, and we are monitoring for similar reversals on the U.S. dollar (DXY) and high yield spreads.


Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>M2 contracted 1.3%YoY in Dec'22, its first YoY contraction in 80+ years. Since core PCE inflation was still 4.4%YoY that month, more monetary contraction is needed.  </li>
<li>The 10yr-2yr yield spread is -0.76pp (10th Feb'23), while ISM manufacturing new orders have slipped to 42.5, both unequivocally signaling that recession will likely begin next quarter (Q2 2023). </li>
<li>US real GDP decelerated for 4 consecutive quarters (to +1%YoY in 4Q2022), but the labour market appears tight merely because the participation rate is 4pp lower than 2008.</li>
</ul>


M2 contracted 1.3%YoY in Dec'22, its first YoY contraction in 80+ years. Since core PCE inflation was still 4.4%YoY that month, more monetary contraction is needed.  
The 10yr-2yr yield spread is -0.76pp (10th Feb'23), while ISM manufacturing new orders have slipped to 42.5, both unequivocally signaling that recession will likely begin next quarter (Q2 2023). 
US real GDP decelerated for 4 consecutive quarters (to +1%YoY in 4Q2022), but the labour market appears tight merely because the participation rate is 4pp lower than 2008.


US: Recession Imminent, as M2 Needs to Contract Further to Squeeze Out Inflation

<ul>
<li>Over the past two weeks, we have been steadfast in our belief that this current rally/short squeeze is likely to fizzle in the 4100-4165 area on the S&amp;P 500.</li>
<li>There has yet to be any meaningful deterioration and we cannot rule out the SPX reaching higher, potentially for 4300-4325 (August 2022 highs).</li>
<li>We continue to preach caution and believe upside is limited on the market indexes. Any combination of a continued strong labor market or hotter-than-expected inflation could upset the market.</li>
</ul>


Over the past two weeks, we have been steadfast in our belief that this current rally/short squeeze is likely to fizzle in the 4100-4165 area on the S&amp;P 500.
There has yet to be any meaningful deterioration and we cannot rule out the SPX reaching higher, potentially for 4300-4325 (August 2022 highs).
We continue to preach caution and believe upside is limited on the market indexes. Any combination of a continued strong labor market or hotter-than-expected inflation could upset the market.


Downgrading Energy; SPX Final Reach Up to 4300-4325?; Buys in Restaurants, Retailers, Industrials

<ul>
<li>We previously discussed our belief that equities were in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area on S&amp;P 500</li>
<li>And, as you will see below, countless other indexes and Sectors are testing important resistance levels. We continue to expect 4100-4165 on the S&amp;P 500 to cap upside</li>
<li>Buy ideas highlighted within defensives, including Consumer Staples, Health Care, and Communications: CMCSA, CHTR, UL, KHC, CAG, SJM, CPB, LLY, MRK, and NVO</li>
</ul>


We previously discussed our belief that equities were in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area on S&amp;P 500
And, as you will see below, countless other indexes and Sectors are testing important resistance levels. We continue to expect 4100-4165 on the S&amp;P 500 to cap upside
Buy ideas highlighted within defensives, including Consumer Staples, Health Care, and Communications: CMCSA, CHTR, UL, KHC, CAG, SJM, CPB, LLY, MRK, and NVO


Many Indexes/Sectors Testing Resistance; Limited Upside From Here; Buys in Staples and Health Care

<ul>
<li>FOMC hiked the Fed Funds rate 50bp to 4.25-4.5% as expected, and raised the median forecast to 5.1% for end-2023. We still expect a 5% peak in Mar'23.</li>
<li>M2 grew faster in Mar'20-Feb'22 than in any month for a century. But M2 decelerated to 1.25%YoY growth in Oct'22, so core PCE inflation will ease to 3.5% by Mar'23.</li>
<li>The steeply inverted yield curve and ISM new orders (&lt;50 for 3 months) make recession inevitable by Q2/2023. Core Inflation at 2.5%YoY will bring a 25bp rate cut in Jul'23.   </li>
</ul>


FOMC hiked the Fed Funds rate 50bp to 4.25-4.5% as expected, and raised the median forecast to 5.1% for end-2023. We still expect a 5% peak in Mar'23.
M2 grew faster in Mar'20-Feb'22 than in any month for a century. But M2 decelerated to 1.25%YoY growth in Oct'22, so core PCE inflation will ease to 3.5% by Mar'23.
The steeply inverted yield curve and ISM new orders (&lt;50 for 3 months) make recession inevitable by Q2/2023. Core Inflation at 2.5%YoY will bring a 25bp rate cut in Jul'23.   


Belated Fed Hawkishness Makes Recession Inevitable; Rate Cut Likely by Jul'23

United States

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Dow Jones Industrial Average (INDU INDEX)

Dow Jones Industrial Average (INDU INDEX)

Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?

We continue to expect 4165-4200 to cap upside on the S&P 500, but a trip to 4300-4325 is possible. We continue to preach caution. Treasury yields...

Vermilion Research

US: Recession Imminent, as M2 Needs to Contract Further to Squeeze Out Inflation

Despite the 1st YoY M2 contraction YoY in 80+ years, core PCE inflation is double the Fed target. More M2 contraction will drag the US to recession...

Prasenjit K. Basu

Downgrading Energy; SPX Final Reach Up to 4300-4325?; Buys in Restaurants, Retailers, Industrials

We have expected this squeeze to fizzle in the 4100-4165 $SPX area, but with no meaningful deterioration, we could see the $SPX reach for 4300-4325...

Vermilion Research

Many Indexes/Sectors Testing Resistance; Limited Upside From Here; Buys in Staples and Health Care

We continue to expect 4100-4165 on the $SPX to cap upside. Many other indexes and Sectors are also testing important resistance levels dating back...

Vermilion Research

Belated Fed Hawkishness Makes Recession Inevitable; Rate Cut Likely by Jul'23

M2 decelerated to 2.5%YoY growth in Oct'22 & likely contracting now. Core PCE inflation should ease to 3.5%YoY by Mar'23 & (as recession sets in)...

Prasenjit K. Basu