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>Our bullish outlook (since early-November 2023) remains intact. Few things are more bullish than indexes (SPX, NDX) breaking out to all-time highs following a major correction we had in 2022</li>
<li>Last week (5/21/24) we discussed how it is a very bullish sign that there have been three upside gaps in May on the S&amp;P 500, with all gaps left unfilled.</li>
<li>Important short-term gap supports we are watching on SPX include 5250-5263, 5127-5142, and 5073-5101; so far 5250-5263 support has held. Also downgrading Industrials (XLI) to market weight</li>
</ul>


Our bullish outlook (since early-November 2023) remains intact. Few things are more bullish than indexes (SPX, NDX) breaking out to all-time highs following a major correction we had in 2022
Last week (5/21/24) we discussed how it is a very bullish sign that there have been three upside gaps in May on the S&amp;P 500, with all gaps left unfilled.
Important short-term gap supports we are watching on SPX include 5250-5263, 5127-5142, and 5073-5101; so far 5250-5263 support has held. Also downgrading Industrials (XLI) to market weight


Downgrading Manufacturing (XLI) To Market Weight; Shift to Overweight Growth; 5250-5263 SPX Holding

Financial Select Sector SPDR F / Technical Analysis

We continue to see a steady flow of risk-on signals that have us moving toward an outright bullish outlook for the broad US equity market. Below we discuss several bullish developments that leads us to believe we are close to exiting the "mixed market environment" that we have referenced since late March.Charts highlighted: XLF, KBE, Copper, US Dollar, IWD, XLY, Bitcoin, S&amp;P 500, APO, LPLA, ARCC, JHG, KKR, ALLY, CACC, OMF, CIT, WD, GATX, LC, CODI, WRLD, ATLC, BCPC, TROX, ASPN, ASIX, LXU, HWKN, MOS, CF, ICL, SQM, UAN, IPI

We continue to see a steady flow of risk-on signals that have us moving toward an outright bullish outlook for the broad US equity market. Below we discuss several bullish developments that leads us to believe we are close to exiting the "mixed market environment" that we have referenced since late March.Charts highlighted: XLF, KBE, Copper, US Dollar, IWD, XLY, Bitcoin, S&amp;P 500, APO, LPLA, ARCC, JHG, KKR, ALLY, CACC, OMF, CIT, WD, GATX, LC, CODI, WRLD, ATLC, BCPC, TROX, ASPN, ASIX, LXU, HWKN, MOS, CF, ICL, SQM, UAN, IPI

Upgrading Financials To Overweight; Downgrading Communications To Market Weight

Key Points:<ul>
<li>Consumer Discretionary retailers and restaurants continue to demonstrate leadership characteristics. Many are breaking to new price and RS highs.</li>
<li>A number of small-cap E&amp;P’s have developed bullish bases and continue to have constructive RS trends.</li>
<li>A few semi supplier stocks are breaking price and RS downtrends.</li>
</ul>

Key Points:
Consumer Discretionary retailers and restaurants continue to demonstrate leadership characteristics. Many are breaking to new price and RS highs.
A number of small-cap E&amp;P’s have developed bullish bases and continue to have constructive RS trends.
A few semi supplier stocks are breaking price and RS downtrends.


Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<ul><li>LSB currently operates three downstream integrated ammonia production facilities.</li><li>Behrman said key competitive advantages include a cost structure underpinned by access to low-cost US natural gas feedstock, strategic proximity with plants located in three states (OK, AK, and AL), and good logistics with access to waterways, truck, and rail.</li><li>About half of LSB’s output is geared toward agricultural applications (fertilizers), while the remaining is geared toward various industrial applications.</li></ul>

LSB currently operates three downstream integrated ammonia production facilities.Behrman said key competitive advantages include a cost structure underpinned by access to low-cost US natural gas feedstock, strategic proximity with plants located in three states (OK, AK, and AL), and good logistics with access to waterways, truck, and rail.About half of LSB’s output is geared toward agricultural applications (fertilizers), while the remaining is geared toward various industrial applications.

LSB Industries, Inc. - WTR Small-Cap Spotlight Recap

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

<ul>
<li>This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. </li>
<li>The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. </li>
<li>These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.</li>
</ul>


This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. 
The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. 
These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.


Overearning Short Candidates: LSB Indust., CF Indust., Alpha Metallurg., Mueller Indust.

United States

LSB Industries, Inc., through its subsidiaries, manufactures and sells chemical products for the mining, agricultural, and industrial markets.  The Company also manufactures and sells commercial and residential climate control products, as well as provides specialized engineering services and other activities.

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Lsb Industries (LXU US)

Downgrading Manufacturing (XLI) To Market Weight; Shift to Overweight Growth; 5250-5263 SPX Holding

Downgrading Manufacturing $XLI to Market Weight; Shift to Overweight Growth $IWF; Three May $SPX Upside Gaps Unfilled = Bullish; Expect supports at...

Vermilion Research

Upgrading Financials To Overweight; Downgrading Communications To Market Weight

We are upgrading Financials to overweight; Financial Sector ETFs (XLF, RYF), banks (KBE, KRE), and insurance stocks (KIE) are all breaking out to...

Vermilion Research

Vital Signs: Actionable U.S. Stocks

Key Points: Consumer Discretionary retailers and restaurants continue to demonstrate leadership characteristics. Many are breaking to new price and...

Vermilion Research

LSB Industries, Inc. - WTR Small-Cap Spotlight Recap

According to Behrman, this leads to the willingness of some industrial customers to pay a premium for low-carbon ammonia relative to standard gray...

Water Tower Research

Overearning Short Candidates: LSB Indust., CF Indust., Alpha Metallurg., Mueller Indust.

Margin over-earners are fertile hunting ground for shorts if the reasons for the margin increase are unsustainable or fraudulent. This week: LSB...

Eric Fernandez, CFA

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