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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>There continues to be little traction above $93 on MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. Important downside targets are $86, $84, and $75-77.</li>
<li>Additionally, the EURO STOXX 50 remains below 2-year resistance at 4400-4415.</li>
<li>We remain overweight Europe, Japan, and India, and we prefer to only add exposure on a pullback -- especially in Japan where indexes are bullish yet extended.</li>
</ul>


There continues to be little traction above $93 on MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. Important downside targets are $86, $84, and $75-77.
Additionally, the EURO STOXX 50 remains below 2-year resistance at 4400-4415.
We remain overweight Europe, Japan, and India, and we prefer to only add exposure on a pullback -- especially in Japan where indexes are bullish yet extended.


No Traction Above $93 on ACWI-US or 4400-4415 on EURO STOXX 50. Buys in Defensives/Japan/EM

<ul>
<li>The S&amp;P 500 is approaching the 4165-4200 area; we continue to believe this will cap upside in 2023, but we also acknowledge that a move to 4300-4325 is possible</li>
<li>Considering limited upside in both scenarios, we continue to recommend shifting to defensives, particularly Health Care (XLV), Utilities (RYU, XLU), Consumer Staples (XLP), and precious metals miners (GDX)</li>
<li>10-Year and 30-Year Treasury yields testing short-term resistance while the US dollar (DXY) tests support at $101-101.50.</li>
</ul>


The S&amp;P 500 is approaching the 4165-4200 area; we continue to believe this will cap upside in 2023, but we also acknowledge that a move to 4300-4325 is possible
Considering limited upside in both scenarios, we continue to recommend shifting to defensives, particularly Health Care (XLV), Utilities (RYU, XLU), Consumer Staples (XLP), and precious metals miners (GDX)
10-Year and 30-Year Treasury yields testing short-term resistance while the US dollar (DXY) tests support at $101-101.50.


Favor Defensives as S&P 500 Tests 4165-4200; Buys in Consumer Staples & Europe/UK Telecomm

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The agreement between Vodafone and the consortium values the company at a generous 24x EV/Fwd EBITDA, 19% premium over the 3-month VWAP (14.7% above my DCF-based fair value estimate).</li>
<li>Nevertheless the spread (+0.44%) signals that Oak Holdings may not obtain the necessary 95% to squeeze-out. Risk arb funds are betting on higher returns from a Domination Agreement.</li>
<li>On rather aggressive assumptions (90% payout, 4.5% rate of return, 2.5% growth) a dividend-discount model provides a €39.6/share valuation. This could still turn into another messy Kabel Deustschland scenario.</li>
</ul>


The agreement between Vodafone and the consortium values the company at a generous 24x EV/Fwd EBITDA, 19% premium over the 3-month VWAP (14.7% above my DCF-based fair value estimate).
Nevertheless the spread (+0.44%) signals that Oak Holdings may not obtain the necessary 95% to squeeze-out. Risk arb funds are betting on higher returns from a Domination Agreement.
On rather aggressive assumptions (90% payout, 4.5% rate of return, 2.5% growth) a dividend-discount model provides a €39.6/share valuation. This could still turn into another messy Kabel Deustschland scenario.


Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement

SPAC Deep Dive, subSPAC

subSPAC

SPAC Deep Dive

Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.

Equity Bottom-Up

<ul><li>Elon Musk's Starlink recently <a href="https://techcrunch.com/2022/08/25/t-mobile-phones-will-connect-to-starlink-for-free-starting-next-year/" target="_blank" rel="noopener">announced plans</a> to enter the global carrier market, spooking shareholders of space-based cellular operator AST SpaceMobile.</li><li>AST, which went public through a SPAC in 2021, has plans to commercialise global space based telecommunications, but has notably struggled due to technical challenges.</li><li>AST Shareholders have feared that the Starlink announcement risked overshadowing the company’s upcoming launch and also possibly beat the company to market, despite the latter having a significant head start.</li></ul>

Elon Musk's Starlink recently announced plans to enter the global carrier market, spooking shareholders of space-based cellular operator AST SpaceMobile.AST, which went public through a SPAC in 2021, has plans to commercialise global space based telecommunications, but has notably struggled due to technical challenges.AST Shareholders have feared that the Starlink announcement risked overshadowing the company’s upcoming launch and also possibly beat the company to market, despite the latter having a significant head start.

AST SpaceMobile Vs Starlink: The Race for Global Connectivity

<ul>
<li>Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.</li>
<li>Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.</li>
<li>Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).</li>
</ul>


Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

Spain

Telefonica S.A. provides telecommunications services mainly to countries in Europe and Latin America.  The Company offers fixed-line and mobile telephone, Internet, and data transmission services to residential and corporate customers.

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Telefonica SA (TEF SM)

No Traction Above $93 on ACWI-US or 4400-4415 on EURO STOXX 50. Buys in Defensives/Japan/EM

No Traction Above $93 on MSCI $ACWI or 4400-4415 on EURO #STOXX 50. Continues to reinforce our view from early-January that $93 on ACWI caps upside...

Vermilion Research

Favor Defensives as S&P 500 Tests 4165-4200; Buys in Consumer Staples & Europe/UK Telecomm

The $SPX is approaching the 4165-4200 area; we continue to believe this will cap upside in 2023. Considering limited upside, we continue to favor...

Vermilion Research

Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement

The agreement values VTWR at a generous 24x EV/Fwd EBITDA, 19% premium to 3-month VWAP. Oak Holdings intends to enter into a domination and P&L...

Jesus Rodriguez Aguilar

AST SpaceMobile Vs Starlink: The Race for Global Connectivity

Elon Musk's Starlink recently announced plans to enter the global carrier market, spooking shareholders of space-based cellular operator AST...

subSPAC

Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

Hong Kong's Hang Seng and China's $MCHI and $KWEB are near major base breakouts. We are watching is 22,700 on Hang Seng and $56.60 on MCHI; we are...

Vermilion Research

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