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 DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.</li>
<li>Reversals of these downtrends would signal a bear market rally in progress.</li>
<li>We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.</li>
</ul>


The DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.
Reversals of these downtrends would signal a bear market rally in progress.
We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.


Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

<ul>
<li>Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany's DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).</li>
<li>The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.</li>
<li>Relative strength on Japan's TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors</li>
</ul>


Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany's DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).
The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.
Relative strength on Japan's TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors


Japan Emerging as Leadership; Actionable Themes: Japan and Defensives

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/130/266/original/2020-04-24_08-07-36.png?1588109848" class="editor-image img-responsive" data-smartkarma-image-id="130266"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>29TH APRIL </strong>- In the<strong> DETAIL</strong> below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 117 results was 52:3:62; and for the 76 revisions or initial forecasts, the split was 22:2:52. Of the 82 companies announcing annual results, only 22 made forecasts for the current year, while <a href="https://www.smartkarma.com/entities/shimano-inc" target="_blank" data-smartkarma-citation="entities:3777:1" rel="noopener">Shimano (7309 JP)</a> withdrew its FY2020 forecast. Our Sector Score chart is now showing some dramatic changes. <strong>Consumer Services</strong> is now the lowest-scoring Sector following <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>'s poor full-year results. In comparison, significant declines have been seen in <strong>Transportation &amp; Logistics</strong> (<a href="https://www.smartkarma.com/entities/east-japan-railway-co" target="_blank" data-smartkarma-citation="entities:14271:1" rel="noopener">East Japan Railway Co (9020 JP)</a> and <strong>Utilities</strong> (<a href="https://www.smartkarma.com/entities/tokyo-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:2332:1" rel="noopener">Tokyo Gas (9531 JP))</a>.  The <strong>Internet Content &amp; Services</strong> (<a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO (3092 JP)</a>) and <strong>Chemicals</strong> ( <a href="https://www.smartkarma.com/entities/shin-etsu-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:4481:1" rel="noopener">Shin Etsu Chemical (4063 JP)</a>) Sectors are the largest gainers. </p>

Source • Japan Analytics29TH APRIL - In the DETAIL below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 117 results was 52:3:62; and for the 76 revisions or initial forecasts, the split was 22:2:52. Of the 82 companies announcing annual results, only 22 made forecasts for the current year, while Shimano (7309 JP) withdrew its FY2020 forecast. Our Sector Score chart is now showing some dramatic changes. Consumer Services is now the lowest-scoring Sector following Oriental Land (4661 JP)'s poor full-year results. In comparison, significant declines have been seen in Transportation &amp; Logistics (East Japan Railway Co (9020 JP) and Utilities (Tokyo Gas (9531 JP)).  The Internet Content &amp; Services (ZOZO (3092 JP)) and Chemicals ( Shin Etsu Chemical (4063 JP)) Sectors are the largest gainers. 

🇯🇵 JAPAN • Results & Revisions Update 29th April - Mit.Chem, TKC, Keyence, ZOZO, Shimano. Or.Land

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/414/original/2020-04-24_05-17-46.png?1587673330" class="editor-image img-responsive" data-smartkarma-image-id="129414"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/415/original/2020-04-24_05-22-47.png?1587673388" class="editor-image img-responsive" data-smartkarma-image-id="129415"></figure><div class="content-caption">Source • IHS Markit/au Jibun Bank, Cabinet Office</div><p><strong>"GETTING WORSE RAPIDLY"</strong> - According to Japan's Cabinet Office in language that has not been used since May 2009, "the Japanese economy is getting worse rapidly in an extremely severe situation" and has dropped the word "recovering" for the first time in the Abenomics era. The IHS Markit Composite PMI data (sponsored by au Jibun Bank) shown above is already below the trough of 2009 and expectations suggest that the manufacturing output indicator will follow Services into the "20s" next month. The Bank of Japan is reported to be discussing 'unlimited' purchases of fixed income securities.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/417/original/IMG_1497.jpg?1587675446" class="editor-image img-responsive" data-smartkarma-image-id="129417"></figure><div class="content-caption">Source • NHK</div><p><strong>SIGNALLING</strong> - COVID-19 daily case counts remain above 300 and 100, respectively, although these are lagging indicators given that it takes up to one week to get a test result due to a lack of personnel and excessively fax-centric bureaucratic processes.  The central and local governments are stepping up their rhetoric to encourage more social distancing, especially over the upcoming Golden Week national holidays. They have asked companies to 'cease operations' from tomorrow until 6th May. Parking lots at tourist attractions are being closed, and flower buds are being culled in parks and nature reserves. The closure of national highway routes is also being discussed. Many pachinko parlours are defying the government's request to cease operations. They may now be subjected to 'naming and shaming' - a tactic complicated by the over-representation of Korean ethnic minorities in the industry.<strong> Japan's current strategy risks falling between its twin objectives of limiting the damage to the economy while avoiding 'overshoot' in the medical system. We continue to expect the 'states of emergency' to be extended beyond 6th May.</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/418/original/2020-04-23_07-03-24.png?1587676688" class="editor-image img-responsive" data-smartkarma-image-id="129418"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>INTERIM FORECASTS</strong> - Many companies issue forecasts for the interim as well as the annual period ahead. The former forecasts are often prepared and reviewed at a lower 'level' in the company than the latter, which are seen as 'targets' set by the CEO. As a result and as seen last year, the interim forecasts provide better forward guidance, a pattern that is beginning to repeat this year as seen in our scoring above. </p><p>In the <strong>DETAIL</strong> below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the 16 results was 9:0:7; and for the 17 revisions/forecasts, the split was 12:0:5, with three of the twelve 'positives' being in the Information Technology Sector. Of the eleven companies reporting annual results, only five made a forecast for the current year. <strong><a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon (7751 JP)</a></strong>became the largest company so far by market cap to withdraw its year-end forecasts. One company withdrew its dividend forecast; two increased their payouts, while <a href="https://www.smartkarma.com/entities/nok-corp" target="_blank" data-smartkarma-citation="entities:2980:1" rel="noopener">NOK (7240 JP)</a> reduced.</p>

Source • IHS Markit/au Jibun Bank, Cabinet Office"GETTING WORSE RAPIDLY" - According to Japan's Cabinet Office in language that has not been used since May 2009, "the Japanese economy is getting worse rapidly in an extremely severe situation" and has dropped the word "recovering" for the first time in the Abenomics era. The IHS Markit Composite PMI data (sponsored by au Jibun Bank) shown above is already below the trough of 2009 and expectations suggest that the manufacturing output indicator will follow Services into the "20s" next month. The Bank of Japan is reported to be discussing 'unlimited' purchases of fixed income securities.  Source • NHKSIGNALLING - COVID-19 daily case counts remain above 300 and 100, respectively, although these are lagging indicators given that it takes up to one week to get a test result due to a lack of personnel and excessively fax-centric bureaucratic processes.  The central and local governments are stepping up their rhetoric to encourage more social distancing, especially over the upcoming Golden Week national holidays. They have asked companies to 'cease operations' from tomorrow until 6th May. Parking lots at tourist attractions are being closed, and flower buds are being culled in parks and nature reserves. The closure of national highway routes is also being discussed. Many pachinko parlours are defying the government's request to cease operations. They may now be subjected to 'naming and shaming' - a tactic complicated by the over-representation of Korean ethnic minorities in the industry. Japan's current strategy risks falling between its twin objectives of limiting the damage to the economy while avoiding 'overshoot' in the medical system. We continue to expect the 'states of emergency' to be extended beyond 6th May.Source • Japan AnalyticsINTERIM FORECASTS - Many companies issue forecasts for the interim as well as the annual period ahead. The former forecasts are often prepared and reviewed at a lower 'level' in the company than the latter, which are seen as 'targets' set by the CEO. As a result and as seen last year, the interim forecasts provide better forward guidance, a pattern that is beginning to repeat this year as seen in our scoring above. In the DETAIL below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the 16 results was 9:0:7; and for the 17 revisions/forecasts, the split was 12:0:5, with three of the twelve 'positives' being in the Information Technology Sector. Of the eleven companies reporting annual results, only five made a forecast for the current year. Canon (7751 JP)became the largest company so far by market cap to withdraw its year-end forecasts. One company withdrew its dividend forecast; two increased their payouts, while NOK (7240 JP) reduced.

🇯🇵 JAPAN • Revisions & Results 23rd April - "Getting Worse Rapidly" + OBICs, TGas, Canon, Omron

LNG, Oil & Gas, M&A Market Intelligence Specialist

Massimo Bellino

<p>On the back of a growing LNG global trade volume, LNG producers have outperformed the US market and their E&amp;P peers including the oil majors over the last two years. As global LNG production reaches a record 316m tonnes in 2018, a 9.6% increase year on year, new capacity additions set to come online in the next three years will be dominated by the US. This insight will examine how the recent entry of US LNG in the market is transforming the LNG industry and which emerging players are driving the change.</p>
<h2><strong>Exhibit 1: LNG Producers Outperform the US Market</strong></h2>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/383/original/ex1.png?1548250163" class="editor-image img-responsive" data-smartkarma-image-id="76383"></figure>
<div class="content-caption">
<em>Source: Capital IQ. Prices as of 22 of January. Un-weighted indexed composites. Oil Majors: Exxon, Chevron, Shell, BP, Total and ENI. Australia LNG: Woodside Energy, Santos, Oil Search. </em><em>independent E&amp;Ps: oil and gas upstream companies with market value greater than $300m as of 18 April 2018.</em>
</div>

On the back of a growing LNG global trade volume, LNG producers have outperformed the US market and their E&amp;P peers including the oil majors over the last two years. As global LNG production reaches a record 316m tonnes in 2018, a 9.6% increase year on year, new capacity additions set to come online in the next three years will be dominated by the US. This insight will examine how the recent entry of US LNG in the market is transforming the LNG industry and which emerging players are driving the change.
Exhibit 1: LNG Producers Outperform the US Market


Source: Capital IQ. Prices as of 22 of January. Un-weighted indexed composites. Oil Majors: Exxon, Chevron, Shell, BP, Total and ENI. Australia LNG: Woodside Energy, Santos, Oil Search. independent E&amp;Ps: oil and gas upstream companies with market value greater than $300m as of 18 April 2018.


LNG Producers Outperform as More LNG from the US Is Coming into the Market

Japan

TOKYO GAS CO., LTD. produces and supplies liquefied natural gas to Tokyo and the surrounding areas.  The Company maintains and manages gas supply equipment and sells air conditioning appliances.  Tokyo Gas operates power generation business as well.

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Tokyo Gas (9531 JP)

Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

The $DAX and Hang Seng are reversing their downtrends while China $MCHI and China Internet $KWEB are currently testing their respective multi-month...

Vermilion Research

Japan Emerging as Leadership; Actionable Themes: Japan and Defensives

Despite the intact downtrend on Japan's TOPIX, relative strength is reversing topside a 4.5-year downtrend; this tells us Japan is emerging as...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions Update 29th April - Mit.Chem, TKC, Keyence, ZOZO, Shimano. Or.Land

29TH APRIL - In the DETAIL below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements. The...

Campbell Gunn

🇯🇵 JAPAN • Revisions & Results 23rd April - "Getting Worse Rapidly" + OBICs, TGas, Canon, Omron

"GETTING WORSE RAPIDLY" - According to Japan's Cabinet Office in language that has not been used since May 2009, "the Japanese economy is getting...

Campbell Gunn

LNG Producers Outperform as More LNG from the US Is Coming into the Market

On the back of a growing LNG global trade volume, LNG producers have outperformed the US market and their E&P peers including the oil majors...

Massimo Bellino

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