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>Key supports are currently being tested at 3900-3910 on the S&amp;P 500, $293 on the Nasdaq 100 (QQQ), and $177-178 on the Russell 2000 (IWM).</li>
<li>We see a bounce as possible at these levels, but breaks below these levels would virtually guarantee a test of the YTD lows -- or worse.</li>
<li>WTI crude oil is breaking below the critical $85 support level, confirming a major top in place. The Bloomberg commodity index needs to break $32.50 to confirm a major top.</li>
</ul>


Key supports are currently being tested at 3900-3910 on the S&amp;P 500, $293 on the Nasdaq 100 (QQQ), and $177-178 on the Russell 2000 (IWM).
We see a bounce as possible at these levels, but breaks below these levels would virtually guarantee a test of the YTD lows -- or worse.
WTI crude oil is breaking below the critical $85 support level, confirming a major top in place. The Bloomberg commodity index needs to break $32.50 to confirm a major top.


S&P 500 Testing 3900 Support; Commodities, WTI Crude Oil Topping?; Buying Uranium, Ag Equipment

<ul>
<li>After a substantial rally, the S&amp;P500 was unable to break above its 200-day MA and market indexes have violated steep 5-week uptrends; we view this pullback as a critical test.</li>
<li>This is where we see if prior breakout levels/important moving averages hold and market indexes make a higher low, or if this was nothing more than a bear market rally.</li>
<li>Barring a Fed pivot, and with Treasury yields and the DXY inflecting higher (and potentially commodities, too), it increases the odds for a deeper pullback in the broad market indexes.</li>
</ul>


After a substantial rally, the S&amp;P500 was unable to break above its 200-day MA and market indexes have violated steep 5-week uptrends; we view this pullback as a critical test.
This is where we see if prior breakout levels/important moving averages hold and market indexes make a higher low, or if this was nothing more than a bear market rally.
Barring a Fed pivot, and with Treasury yields and the DXY inflecting higher (and potentially commodities, too), it increases the odds for a deeper pullback in the broad market indexes.


Don't Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US equity market. At this point in time, the rising tensions have done virtually no damage to the bullish trends and indicators that continue to dominate the market. In today’s report we highlight attractive Groups and stocks within Manufacturing, Services, Technology, and Transportation: Aero Defense, Large-Cap, HR &amp; Employment Svcs, Large-Cap, Optical Equipment, and Shipping, Energy

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US equity market. At this point in time, the rising tensions have done virtually no damage to the bullish trends and indicators that continue to dominate the market. In today’s report we highlight attractive Groups and stocks within Manufacturing, Services, Technology, and Transportation: Aero Defense, Large-Cap, HR &amp; Employment Svcs, Large-Cap, Optical Equipment, and Shipping, Energy

U.S. Equity Strategy: Bullish Outlook Intact

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Equity Bottom-Up

Tsakos Energy Navigation Ltd / Equity Bottom-Up

<ul><li>
Attractive valuation on charter cover with potential upside: Tsakos Energy Navigation’s (TNP’s) TCE revenue for 3Q18 dropped 4.5% y/y to USD 92.6m as the average TCE rate of USD 16,547pd during the quarter was 5.1% lower than the rates realised in 3Q17. Operating expenses 3Q18 increased 7.4% to USD 53.4m from USD 49.7m in 3Q17, and adjusted EBITDA in 3Q18 dropped 17% to USD 39.2m from USD 47.2m in 3Q17. The company recorded net loss of USD 24.8m in 3Q18, compared with net loss of USD 10m in 3Q17. TNP has a fixed term employment for 74% of vessel operating days, nearly 38% of which has the provision of profit-sharing to capture market upturns. The high charter coverage will ensure the company can cover operating expenses over the next three years with ease. Additionally, provisions of profit-sharing on 19 vessels, coupled with spot exposure of 26%, provide an upside for the company in a rising market. We estimate net loss of USD 13m in 2019. However, with estimated net profit of USD 45m, the company will flip to the black in 2020, and earnings are expected to grow further in 2021. Accordingly, we reiterate our Attractive stance with a fair value estimate of USD 4.00 per share.</li></ul>


Attractive valuation on charter cover with potential upside: Tsakos Energy Navigation’s (TNP’s) TCE revenue for 3Q18 dropped 4.5% y/y to USD 92.6m as the average TCE rate of USD 16,547pd during the quarter was 5.1% lower than the rates realised in 3Q17. Operating expenses 3Q18 increased 7.4% to USD 53.4m from USD 49.7m in 3Q17, and adjusted EBITDA in 3Q18 dropped 17% to USD 39.2m from USD 47.2m in 3Q17. The company recorded net loss of USD 24.8m in 3Q18, compared with net loss of USD 10m in 3Q17. TNP has a fixed term employment for 74% of vessel operating days, nearly 38% of which has the provision of profit-sharing to capture market upturns. The high charter coverage will ensure the company can cover operating expenses over the next three years with ease. Additionally, provisions of profit-sharing on 19 vessels, coupled with spot exposure of 26%, provide an upside for the company in a rising market. We estimate net loss of USD 13m in 2019. However, with estimated net profit of USD 45m, the company will flip to the black in 2020, and earnings are expected to grow further in 2021. Accordingly, we reiterate our Attractive stance with a fair value estimate of USD 4.00 per share.

Tsakos Energy Navigation – Leverage Seems Manageable in Rising Tanker Market

Thematic (Sector/Industry)

The crude tanker market remained weak in the initial nine months of 2018 as vessel earnings remained below breakeven across vessel classes. However, elevated scrapping activity during the year kept a check on fleet growth, and vessel earnings improved in the fourth quarter of 2018. Unlike others, the stocks of Frontline and DHT Holdings generated an overall return of 20.5% and 9.2% in 2018, respectively. The stocks moved on anticipated lines following our upgrade in August 2018. Few stocks such as Frontline and DHT Holdings crossed our fair value estimate. However, all stocks plunged in December 2018 due to the sell-off pressure on New York exchanges.The tanker market has bottomed out in 2018, and we expect a gradual recovery over the next three years as a higher number of demolitions will facilitate market re-balancing by limiting the supply side growth. We expect the stocks to gradually follow the upward trajectory in the second half of 2019 given the optimistic outlook and hence, have awarded ‘Attractive’ rating to tanker stocks under our coverage.

The crude tanker market remained weak in the initial nine months of 2018 as vessel earnings remained below breakeven across vessel classes. However, elevated scrapping activity during the year kept a check on fleet growth, and vessel earnings improved in the fourth quarter of 2018. Unlike others, the stocks of Frontline and DHT Holdings generated an overall return of 20.5% and 9.2% in 2018, respectively. The stocks moved on anticipated lines following our upgrade in August 2018. Few stocks such as Frontline and DHT Holdings crossed our fair value estimate. However, all stocks plunged in December 2018 due to the sell-off pressure on New York exchanges.The tanker market has bottomed out in 2018, and we expect a gradual recovery over the next three years as a higher number of demolitions will facilitate market re-balancing by limiting the supply side growth. We expect the stocks to gradually follow the upward trajectory in the second half of 2019 given the optimistic outlook and hence, have awarded ‘Attractive’ rating to tanker stocks under our coverage.

Tanker Shipping - 2019Gradual Recovery on Horizon

United States

Tsakos Energy Navigation Ltd. owns and operates a fleet of tankers.  The fleet includes VLCC, suezmax, aframax, panamax, and handymax tankers suitable for transporting crude oil, refined petroleum products, and other liquids.  The Company's technical manager is Tsakos Columbia ShipManagement.

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Tsakos Energy Navigation Ltd (TNP US)

S&P 500 Testing 3900 Support; Commodities, WTI Crude Oil Topping?; Buying Uranium, Ag Equipment

Key supports are currently being tested at 3900-3910 on $SPX, $293 on the $QQQ $NDX, and $177-178 on the $IWM. WTI crude oil is breaking below $85;...

Vermilion Research

Don't Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind

$SPX $QQQ $IWM Pullback Underway as Rising $DXY and 10-Yr Treasury Yield Back to Being Headwind; Commodities $DJP $BCOM Attempting to Break Out....

Vermilion Research

U.S. Equity Strategy: Bullish Outlook Intact

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US...

Vermilion Research

Tsakos Energy Navigation – Leverage Seems Manageable in Rising Tanker Market

Attractive valuation on charter cover with potential upside: Tsakos Energy Navigation’s (TNP’s) TCE revenue for 3Q18 dropped 4.5% y/y to USD 92.6m...

Drewry Maritime Financial Research

Tanker Shipping - 2019Gradual Recovery on Horizon

The crude tanker market remained weak in the initial nine months of 2018 as vessel earnings remained below breakeven across vessel classes....

Drewry Maritime Financial Research

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