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 Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.</li>
<li>We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.</li>
<li>Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218</li>
</ul>


The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.
We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.
Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218


Semiconductors Re-Emerge as Leadership; $SPX $QQQ $IWM Outlook Remains Bullish

<ul>
<li>Our outlook remains bullish and we see the market in the midst of a significant end-of-year rally that we have been expecting since mid-October.</li>
<li>We continue to expect support at 20-day MAs on $SPX and Nasdaq 100 (QQQ), while support at current levels or the 50-day MA is likely on the Russell 2000 (IWM).</li>
<li>Market dynamics continue to improve, giving us confidence that this bull run is likely to go at least another month into mid-January, and quite likely beyond.</li>
</ul>


Our outlook remains bullish and we see the market in the midst of a significant end-of-year rally that we have been expecting since mid-October.
We continue to expect support at 20-day MAs on $SPX and Nasdaq 100 (QQQ), while support at current levels or the 50-day MA is likely on the Russell 2000 (IWM).
Market dynamics continue to improve, giving us confidence that this bull run is likely to go at least another month into mid-January, and quite likely beyond.


Growth Leading This EOY Rally; Expect More Upside. PHLX Semis $SOXX With a Bullish 5-Month Reversal

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

Ligent Technologies / Equity Capital Markets

<ul>
<li>Ligent, a Hisense-controlled optical transceiver and optical network terminal maker, has passed the HKEX listing hearing and is seeking a Main Board listing. Citi and CITIC are the joint sponsors.</li>
<li>Our prior note covered the company's business, financials and pre-IPO investor backing.</li>
<li>This note compares Ligent with listed peers from a financial, operating and valuation perspective.</li>
</ul>


Ligent, a Hisense-controlled optical transceiver and optical network terminal maker, has passed the HKEX listing hearing and is seeking a Main Board listing. Citi and CITIC are the joint sponsors.
Our prior note covered the company's business, financials and pre-IPO investor backing.
This note compares Ligent with listed peers from a financial, operating and valuation perspective.


Ligent (纳真科技) Pre-IPO: Peer Comparison

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream demand continue to thrive.</li><li>We reaffirm our positive stance on optical transceiver players, specifically in light of their ongoing capacity expansion and production ramp-up of the high data rate optical modules, e.g., 400G/800G products.</li><li>Among those players we favor Innolight (300308 CH, BUY) and TFC (300394 CH, NR), both of which have leveraged the AI wave effectively through 2023 and stayed on strong trajectory into 2024. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream demand continue to thrive.We reaffirm our positive stance on optical transceiver players, specifically in light of their ongoing capacity expansion and production ramp-up of the high data rate optical modules, e.g., 400G/800G products.Among those players we favor Innolight (300308 CH, BUY) and TFC (300394 CH, NR), both of which have leveraged the AI wave effectively through 2023 and stayed on strong trajectory into 2024. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Semi – Market Outlook on Optical Transceivers

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhongji-innolight" target="_blank" data-smartkarma-citation="entities:55331:1" rel="noopener">Zhongji InnoLight (3308 HK)</a>'s 2Q26 net profit surged 228.2%, with gross and operating margins expanding 5.3pp and 7.9pp, respectively, rebuffing the market's concerns.</li>
<li>There is room for earnings upgrades. Management has indicated that raw material price pressure will soften and that inventory is sufficient, benefiting 2H26 margin.</li>
<li>Its HA premium has picked up after the IPO and is currently at 3.6%. Applying a 10% maximum justifiable premium, it means an H-share price of HK$1,210.50.</li>
</ul>



Zhongji InnoLight (3308 HK)'s 2Q26 net profit surged 228.2%, with gross and operating margins expanding 5.3pp and 7.9pp, respectively, rebuffing the market's concerns.
There is room for earnings upgrades. Management has indicated that raw material price pressure will soften and that inventory is sufficient, benefiting 2H26 margin.
Its HA premium has picked up after the IPO and is currently at 3.6%. Applying a 10% maximum justifiable premium, it means an H-share price of HK$1,210.50.


Zhongji InnoLight (3308 HK): Rebuffing the Margin Concerns

United States

Lumentum Holdings Inc. operates as a holding company. The Company, through its subsidiaries, supplies optical and photonic products. Lumentum Holdings serves data communications and telecommunications, networking, and life-sciences markets worldwide.

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Lumentum Holdings (LITE US)

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Growth Leading This EOY Rally; Expect More Upside. PHLX Semis $SOXX With a Bullish 5-Month Reversal

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Ligent (纳真科技) Pre-IPO: Peer Comparison

Ligent has passed the HKEX listing hearing. In this note, we compare the company with its listed peers on operating data, financials and valuation,...

Ke Yan, CFA, FRM

Semi – Market Outlook on Optical Transceivers

If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream...

CMB International

Zhongji InnoLight (3308 HK): Rebuffing the Margin Concerns

Zhongji InnoLight's 2Q26 results demonstrated its margin resilience, providing room for an earnings upgrade. Its HA premium has also steadily...

Osbert Tang, CFA

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