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

<ul>
<li>The S&amp;P 500 (SPX) is back to test YTD highs and important resistance in the 5670-5783 range. This is an important target/resistance area we have discussed for weeks.</li>
<li>Using the 2007 SPX topping analog suggests a 2% or less move above the prior all-time high set in July at 5670 before topping, which gives the 5783 number.</li>
<li>As long as SPX does not have a weekly close above 5783 we continue to recommend reducing risk and shifting to defensives,and this is the ideal time to do so.</li>
</ul>


The S&amp;P 500 (SPX) is back to test YTD highs and important resistance in the 5670-5783 range. This is an important target/resistance area we have discussed for weeks.
Using the 2007 SPX topping analog suggests a 2% or less move above the prior all-time high set in July at 5670 before topping, which gives the 5783 number.
As long as SPX does not have a weekly close above 5783 we continue to recommend reducing risk and shifting to defensives,and this is the ideal time to do so.


SPX Testing Resistance as Rate Cut Cycle Begins; SPX 5670-5783 Is Resistance, 2007 Analog on Track

<ul>
<li>Our long-term outlook remains neutral on the S&amp;P 500 (SPX) as of our 8/6/24 Compass, after being bullish since early-November 2023.</li>
<li>Since late-July discussed expectations for a 1-to 4-month pullback/consolidation on SPX and QQQ; now it's likely to last closer to four months, and potentially 4- to 6-months from 7/17/24.</li>
<li>At that point the market will decide which way this consolidation resolves. Throughout this pullback we have said that this consolidation could end up being a significant topping pattern.</li>
</ul>


Our long-term outlook remains neutral on the S&amp;P 500 (SPX) as of our 8/6/24 Compass, after being bullish since early-November 2023.
Since late-July discussed expectations for a 1-to 4-month pullback/consolidation on SPX and QQQ; now it's likely to last closer to four months, and potentially 4- to 6-months from 7/17/24.
At that point the market will decide which way this consolidation resolves. Throughout this pullback we have said that this consolidation could end up being a significant topping pattern.


Upgrading Staples, Real Estate, and Health Care to Overweight; List of Concerns Continues to Grow

<ul>
<li>Breadth continues to improve and Russell 2000 (IWM) small-caps and the Dow remain bullish, all while the S&amp;P 500 and Nasdaq 100 (QQQ) are going through a pullback/consolidation phase.</li>
<li>Considering the Russell 2000 vs. S&amp;P 500 ratio is reversing a 3.5-year downtrend, we expect this trend of small-cap outperformance to continue for months or longer.</li>
<li>With new risk-off signals emerging, potential pullback zones we would look for include 5100-5191 on the S&amp;P 500 and $443-$449 on the QQQ, expecting a low near the election.</li>
</ul>


Breadth continues to improve and Russell 2000 (IWM) small-caps and the Dow remain bullish, all while the S&amp;P 500 and Nasdaq 100 (QQQ) are going through a pullback/consolidation phase.
Considering the Russell 2000 vs. S&amp;P 500 ratio is reversing a 3.5-year downtrend, we expect this trend of small-cap outperformance to continue for months or longer.
With new risk-off signals emerging, potential pullback zones we would look for include 5100-5191 on the S&amp;P 500 and $443-$449 on the QQQ, expecting a low near the election.


Upgrading Health Care to Market Weight; Risk-Off Signals Suggest SPX and QQQ Pullback to Continue

<ul>
<li>In spite of last week's hotter-than-expected inflation reports, the Russell 2000 (IWM) outperformed relative to the SPX and QQQ, and ended the week at YTD weekly closing highs.</li>
<li>The fact that small- and mid-caps outperformed during a week with two hot inflation reports is a sign we could see more outperformance in the weeks/months ahead.</li>
<li>Adding to the risk-on theme, the DXY displays a false breakout at $104.60-$104.70. Our bullish outlook that we have had since early November 2023 remains intact. </li>
</ul>


In spite of last week's hotter-than-expected inflation reports, the Russell 2000 (IWM) outperformed relative to the SPX and QQQ, and ended the week at YTD weekly closing highs.
The fact that small- and mid-caps outperformed during a week with two hot inflation reports is a sign we could see more outperformance in the weeks/months ahead.
Adding to the risk-on theme, the DXY displays a false breakout at $104.60-$104.70. Our bullish outlook that we have had since early November 2023 remains intact. 


Small Caps Outperform Despite "Hot" Inflation Reports; Equal-Weighted S&P 500 Breakout

<ul>
<li>More restrictive Fed policy than expected is disproportionately hitting small/mid-caps which are more sensitive to higher interest rates. This suggests we could see further consolidation for small- and mid-caps.</li>
<li>Large-Caps (SPX, Nasdaq 100, DJI) remain bullish on continued strength from mega-caps (AMZN, META, NVDA,MSFT). Our bullish outlook remains appropriate, but we discuss what would lead us to get cautious.</li>
<li>1-, 2-, and 10-year Treasury yields testing resistance today and failing. U.S. dollar (DXY) also testing key resistance at $104.60. We also push back on the bad breadth argument (again).</li>
</ul>


More restrictive Fed policy than expected is disproportionately hitting small/mid-caps which are more sensitive to higher interest rates. This suggests we could see further consolidation for small- and mid-caps.
Large-Caps (SPX, Nasdaq 100, DJI) remain bullish on continued strength from mega-caps (AMZN, META, NVDA,MSFT). Our bullish outlook remains appropriate, but we discuss what would lead us to get cautious.
1-, 2-, and 10-year Treasury yields testing resistance today and failing. U.S. dollar (DXY) also testing key resistance at $104.60. We also push back on the bad breadth argument (again).


Monitoring Rising Treasury Yields & U.S. Dollar (DXY); What Would Lead Us to Get Cautious?

United States

HCA Healthcare, Inc. offers health care services. The Hospital provides diagnosis, treatments, consultancy, nursing, surgeries, and other services, as well as medical education, physician resource center, and training programs. HCA Healthcare serves patients in the United States.

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HCA Healthcare (HCA UN)

SPX Testing Resistance as Rate Cut Cycle Begins; SPX 5670-5783 Is Resistance, 2007 Analog on Track

$SPX Testing Resistance as Rate Cut Cycle Begins; SPX 5670-5783 is Resistance, 2007 Analog on Track if Below 5783. Still Neutral, prefer to sell...

Vermilion Research

Upgrading Staples, Real Estate, and Health Care to Overweight; List of Concerns Continues to Grow

Upgrading Staples $XLP, Real Estate $XLRE, Health Care $XLV to Overweight; List of Concerns Continues to Grow; Dow $DJI, Equal-Weight S&P 500 $RSP,...

Vermilion Research

Upgrading Health Care to Market Weight; Risk-Off Signals Suggest SPX and QQQ Pullback to Continue

Upgrading Health Care $XLV to Market Weight; New Risk-Off Signals Suggest Pullback in $SPX and $QQQ to Continue, looking for pullbacks to 5100-5191...

Vermilion Research

Small Caps Outperform Despite "Hot" Inflation Reports; Equal-Weighted S&P 500 Breakout

Small Caps $IWM $VXF Outperform Despite "Hot" Inflation Reports; Equal-Weighted S&P 500 $RSP Breakout; U.S. Dollar $DXY Failed Breakout at $104.70;...

Vermilion Research

Monitoring Rising Treasury Yields & U.S. Dollar (DXY); What Would Lead Us to Get Cautious?

Monitoring Rising Treasury Yields & U.S. Dollar. 1-, 2-, and 10-year Treasury yields $TNX failing at shorter-term resistances today; $DXY below...

Vermilion Research

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