Dave Nicoski ...
  • Ross LaDuke
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Vermilion Compass: Weekly Equity Strategy

Market rangebound; Upgrading Services

In last week's Compass we made several observations which led us to be cautious. All of the concerning observations have since reversed as the market found support: the U.S. dollar weakened, defensive areas underperformed, cyclical areas held at logical support, high yield spreads narrowed, and the 10-year Treasury yield found support. These positive developments are encouraging, however we believe the market remains rangebound.

• S&P 500 levels. We believe the market remains in purgatory as technical indicators remain mixed. We see the S&P 500 remaining rangebound between support at 2,720-2,730 and resistance at the all-time highs of 2,954.

• 10-year Treasury, high yield spreads reversing course. Last week we highlighted 2.04% as a level where the plunging 10-year Treasury yield had the potential to stabilize, noting it would be consistent with a bounce in the equity market. So far this has played out nicely. Additionally, high yield spreads have narrowed substantially and appear to be reversing course - akin to what happened in late Dec./early Jan. as equities bottomed... see charts below.

• Upgrading Services. RS for our equal-weighted Services Sector is breaking out topside 3.5-year resistance -- overweight/add selective exposure. Actionable stocks highlighted include CLGX, ACM, ARMK, MAN, NCR, and KBR... see pages 2-4. We also highlight attractive Groups and stocks within Services on pages 12-32.

• U.S. dollar (USD) testing major support. The USD has weakened to a critical support level. We continue to believe further weakening may rescue global risk assets by providing a tailwind for EM/foreign equities and the commodity structure... see page 5.

• Foreign markets finding support. Speaking of EM/foreign equities, both developed (EFA) and EM (EEM) are holding at important support levels... see page 5.

• Dr. Copper, Crude oil prices stabilizing. Copper prices remain above key 10-month support in the $2.55-2.60 range and WTI crude oil has found support at $50. Breakdowns below these key levels would be problematic for global equities as it would likely usher in another wave of selling pressure.
Accenture PLC


AECOM is a firm positioned to design, build, finance and operate infrastructure assets for governments, businesses and organizations. The company's business segments are: Design and Consulting Services, which includes of planning, consulting, architectural and engineering design services to commercial and government clients; Construction Services including construction, program and construction management services; Management Services, which includes program and facilities management and maintenance, training, logistics, and systems integration and information technology services; and AECOM Capital, which invests in and develops real estate, public-private partnership and infrastructure projects.


Aramark is a provider of food, facilities and uniform services to education, healthcare, business and industry, and sports, leisure and corrections clients. The company's Food and Support Services segments manage interrelated services-including food, hospitality, procurement and facility services-for school districts, colleges and universities, healthcare facilities, businesses, sports, entertainment and recreational venues, conference and convention centers, national and state parks and correctional institutions; and the company's Uniform and Career Apparel segment provides employee uniform solution, including design, sourcing and manufacturing, delivery, cleaning and maintenance on a contract basis.

Automatic Data Processing Inc.

Automatic Data Processing is a provider of human capital management (HCM) solutions to employers, providing solutions to businesses. The company's two reportable business segments are Employer Services, which provides a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions that include offerings such as payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services; and Professional Employer Organization Services, which serves clients with employment administration outsourcing solutions.

Black Knight

Black Knight is a provider of software, data and analytics solutions to the mortgage and consumer loan, real estate and capital market verticals. The company's solutions facilitate and automate business processes across the homeownership lifecycle, from origination until asset disposition. The company's business is organized into two segments: Software Solutions, which provides software and hosting solutions that facilitate and automate business processes across the homeownership lifecycle; and Data and Analytics, which supports the company's technology solutions and is designed to help lenders and servicers make informed decisions, improve performance, identify and predict risk and generate qualified leads.

Booz Allen Hamilton

Booz Allen Hamilton Holding is a holding company. The company provides management and technology, consulting, engineering, analytics, digital solutions, mission operations, and cyber knowledge to the U.S. and international governments, corporations, and non-profit organizations. The company's services are: Consulting, which focuses on solving client problems and developing mission-oriented solutions; Analytics, which includes decision analytics and data science solutions; Digital Solutions, which develops, designs, and implements solutions; Engineering, which delivers engineering services and solutions; and Cyber, which focuses on active prevention, detection, and cost effectiveness.

Broadridge Financial Solutions

Broadridge Financial Solutions is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The company's services include investor and customer communications, securities processing, and data and analytics solutions. The company's businesses operate in two segments: Investor Communication Solutions, which is involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing; and Global Technology and Operations, which provides office securities processing solutions for capital markets, wealth management, and asset management firms.

Caci International Inc. Cl A

CACI International is a holding company. Through its subsidiaries, the company is engaged in providing information solutions and services. The company's domestic operations provides services and solutions to its domestic customers in the following market areas: business systems; command and control; communications; cyber security; enterprise information technology; health; intelligence services; intelligence systems and support; investigation and litigation support; logistics systems and services; space operations and resiliency; and surveillance and reconnaissance. The company's international operations provide IT services and proprietary data and software products, serving commercial and government customers.


CGI Group is engaged in managing information technology services, including outsourcing, systems integration and consulting, software licenses and maintenance, as well as business process services to help clients realize their strategies and create added value.


CoreLogic is a property information, analytics and data-enabled services provider operating in North America, Western Europe and Asia Pacific. The company has two segments: Property Intelligence and Risk Management Solutions, which combines property information, mortgage information and consumer information to deliver housing market and property-level insights, predictive analytics and risk management capabilities; and Underwriting and Workflow Solutions, which combines property information, mortgage information and consumer information to provide mortgage origination and monitoring solutions, including underwriting-related solutions and data-enabled valuations and appraisals.

Epam Systems

Epam Systems is engaged in providing software product development and digital platform engineering services to clients located around the world, primarily in North America, Europe, Asia and Australia. The company focuses on building partnerships with clients in industries such as financial services, travel and consumer, software and hi-tech, media and entertainment, life sciences and healthcare, and other industries. The company's service offerings include software product development services, custom application development services, application testing services, application maintenance and support, infrastructure management services, and enterprise information management.

Equinix Inc.

Equinix provides a choice of data center interconnection solutions and platform services primarily comprised of colocation, interconnection solutions and platform services. The company operates International Business Exchange? (IBX?) data centers across the Americas; Europe, Middle East and Africa and Asia-Pacific regions where customers directly interconnect with a network ecosystem of partners and customers. The company's IBX data centers include several layers of physical security, cabinet space availability, on-site trained staff, areas for customer care and equipment staging, redundant alternating current/direct current power systems and other redundant and fault-tolerant infrastructure systems.

Euronet Worldwide Inc.

Euronet Worldwide is an electronic payments provider. The company provides payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. The company operates three segments: Electronic Financial Transaction Processing, which processes transactions for a network of automated teller machines and point-of-sale terminals; epay, which provides distribution and processing of prepaid mobile airtime and other electronic content and payment processing services for various prepaid products, cards and services; and Money Transfer, which provides consumer-to-consumer and global account-to-account money transfer services.

Experian PLC

Fidelity Natl Information Services

Fidelity National Information Services is a provider of financial services technology. The company's segments are: Integrated Financial Solutions, which serves the regional and community bank and savings institution for transaction and account processing, payment solutions, channel solutions, digital channels, fraud, risk and compliance solutions, lending and wealth and retirement solutions, and corporate liquidity; Global Financial Solutions, which provides an array of capital markets and asset management and insurance solutions, as well as banking and payments solutions; and Corporate and Other, which includes global commercial services and retail check processing.

First Data Corp- Class A

First Data engages in commerce-enabling technology and solutions for merchants, financial institutions, and card issuers. The company's segments are: Global Business Solutions, which provides retail point-of-sale (POS) merchant acquiring and eCommerce services as well as offerings such as mobile payment services and cloud-based Clover POS operating system; Global Financial Solutions, which provides credit, retail private-label, commercial card as well as licensed financial software systems; and Network & Security Solutions, which provides electronic funds transfer network solutions, debit card processing solutions, stored value network solutions, and security and fraud solutions.

Fiserv Inc.

Fiserv is a provider of financial services technology. The company provides account processing systems, electronic payments processing products and services, internet and mobile banking systems, and related services. The company's operations are reported in the Payments and Industry Products segment, which povides financial institutions and other companies with the products and services required to process electronic payment transactions and to provide their customers access to financial services and transaction capability through digital channels; and Financial Institution Services segment, which provides financial institutions with the products and services they need to run their operations.

Fleetcor Technologies

FleetCor Technologies is provider of commercial payment solutions. The company's five primary product lines are Fuel, which provides fuel payment solutions to businesses and government entities who operate vehicle fleets, as well as to main oil companies;Lodging, which provides lodging payment solutions to employees who travel overnight for work purposes; Tolls, which provides an electronic toll and parking payments product; Corporate Payments, which include virtual cards, purchasing cards, travel and entertainment cards; and Gift, which provides gift card product management and processing services. Additionally, the company provides other payment products including fleet maintenance and employee benefits.


Gartner is a research and advisory company. The company's principal products and services are delivered through its three business segments: Research, which provides insights and advice across various functional areas of the enterprise through research and other reports, briefings, proprietary tools, access to the company's analysts and advisors, peer networking services and membership programs; Conferences, which provides business personnel across the organization the opportunity to learn, share and network; and Consulting, which provides customized solutions to client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving information technology performance.

GDS Holdings ADS (N Shares)

Genpact Ltd.

Global Payments Inc.

Global Payments is a provider of payment technology and software solutions. The company's payment solutions enables its customers to accept card, electronic, check and digital-based payments. The company's offerings include authorization services, settlement and funding services, customer support and help-desk functions, chargeback resolution, terminal rental, sales and deployment, consolidated billing and statements and on-line reporting. Through its wholesale channel, the company provides payment services to merchants through independent sales organizations. The company's credit and debit card transaction processing includes the processing of international card brands, including American Express, JCB, and MasterCard.

Globant SA

Infosys Limited ADS

Invesco S&P 500 Equal Weight Energy ETF

iShares MSCI Emerging Markets ETF

iShares Trust MSCI EAFE Index Fund


KBR is a provider of differentiated, professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries. The company's segments include: Government Services, which provides life-cycle support solutions to defense, space, aviation and other programs and missions for government agencies; Technology and Consulting, which provides licensed technologies and consulting services to the hydrocarbons value chain, from wellhead to crude refining and through refining and petrochemicals to specialty chemicals production; and Engineering and Construction, which provides project and program delivery capability globally.

Leidos Holdings

Leidos Holdings is a holding company. Through its subsidiaries, the company is a science, engineering and information technology company that provides services and solutions in the defense, intelligence, civil and health markets. The company brings domain-specific capability in each of these markets by utilizing seven core capabilities: cybersecurity; data analytics; enterprise IT modernization; operations and logistics; sensors, collection and phenomenology; software development; and systems engineering. The company has the following reportable segments: Defense Solutions, Civil and Health.

LiveRamp Holdings Inc

LiveRamp Holdings provides the identity platform utilized by brands and their partners to deliver products. IdentityLink? is the company's software-as-a-service identity platform that connects people, data, and devices across the physical and digital world, providing privacy-compliant, people-based marketing that allows consumers to connect with brands and products. Utilizing the company's identity graph, IdentityLink first resolves a client's data (first-, second-, or third-party) to consumer identifiers that represent real people in a way that protects consumer privacy.


ManpowerGroup provides a range of workforce solutions and services, which includes recruitment and assessment, training and development, career management, outsourcing, and workforce consulting. Its brands and offerings includes Manpower, Experis, Right Management and ManpowerGroup Solutions. The company's portfolio of recruitment services include permanent, temporary and contract recruitment of professionals, as well as administrative and industrial positions, which are provided under its Manpower and Experis brands. Experis focuses on the areas of information technology, engineering, and finance, while Right Management is focused on talent and career management workforce solutions.

Mastercard CL A

MasterCard is a technology company, in the payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks. The company creates a range of payment solutions and services using its brands, including Mastercard?, Maestro? and Cirrus?. The company facilitates the switching (authorization, clearing and settlement) of payment transactions and delivers related products and services. The company also provides offerings such as safety and security products, information services and consulting, loyalty and reward programs and issuer and acquirer processing.

Materials Select Sector SPDR Fund

Maximus Inc.

MAXIMUS is an operator of government health and human services programs. The company's segments are: Health Services, which provides business process services and appeals and assessments for state, provincial and national government programs; U.S. Federal Services, which provides business process solutions, program management, as well as system and software development and maintenance services for various U.S. federal civilian programs; and Human Services, which provides national, state, provincial and local human services agencies with business process services and related consulting services for welfare-to-work, child support, higher education institutions and other human services programs.

NCR Corp.

NCR is a provider of omni-channel technology solutions that enable the interactions of businesses with their customers. The company's offerings include automated teller machines, point of sale terminals and devices and self-service kiosks, and a complete suite of consulting, implementation, maintenance, support and managed services. The company also resell third-party networking products and provides related service offerings in the telecommunications and technology sectors. The company provides solutions for customers of varying sizes in a range of industries such as financial services, retail, hospitality, travel and telecommunications and technology.

Paychex Inc.

Paychex is a provider of integrated human capital management (HCM) solutions for payroll, human resource (HR), retirement, and insurance services for small-to medium-sized businesses. The company's HCM services include payroll processing and HR management and administration services. Payroll service includes payroll processing, payroll tax administration services, employee payment services, and other ancillary services. The company's Human Resource Services provide retirement services administration, insurance services, HR administration services, and other HR services and products.

PayPal Holdings

PayPal Holdings is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The company enables its consumers and merchants to manage and move their money on any platform and using any device. The company also facilitates person-to-person payments through its PayPal, Venmo, and Xoom products. The company's combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products, compose its proprietary Payments Platform. The company charges fees for completing payment transactions for its customers and other payment-related services that are processed on its Payments Platform.

Science Applications International Corporation

Science Applications International is a provider of technical, engineering and enterprise information technology (IT) services primarily to the U.S. government. The company provides engineering, systems integration and information technology offerings for government projects. The company's offerings include: engineering; technology and equipment platform integration; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services; and end-to-end services spanning the design, development, integration, deployment, management and operations, sustainment and security of its customers' entire IT infrastructure.

Select Sector SPDR-Industrial



Switch is a technology infrastructure company powering the sustainable growth of the connected world and the Internet of Everything. Through its subsidiary, Switch, Ltd., the company provides colocation space and related services to technology and digital media companies, cloud and managed service providers, financial institutions, government agencies, and telecommunications providers that conduct critical business on the Internet. The company develops and operates data centers in Nevada and Michigan.

Total System Services Inc.

Total System Services is a payment solutions provider that provides payment processing services, merchant services and related payment services to financial and nonfinancial institutions. In addition, the company provides general purpose reloadable prepaid and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses. The services the company provides are divided into three operating segments: Issuer Solutions, whereby the company is a third party processor for credit card issuers in North America and Europe; Merchant Solutions, whereby the company operates as a merchant acquirer; and Consumer Solutions, whereby the company is a prepaid program manager.


Visa is a payments technology company. The company's primary products consist of business solutions, which include small business, corporate cards, purchasing cards, virtual accounts, and disbursement accounts; credit, which allows consumers and businesses to access credit to pay for goods and services; debit, which allows consumers and small businesses to purchase goods and services using funds in their demand deposit accounts; prepaid, which addresses consumer-use cases and needs including, general purpose reloadable and payroll; and global ATM, which provides account holders with cash access through issuing and acquiring partnerships with financial institutions and independent ATM operators.

Western Union

Western Union is a holding company. Through its subsidiaries, the company is engaged in money movement and payment services, providing people and businesses with ways to send money and make payments around the world. The company's segments are: Consumer-to-Consumer, which is focused on individual money transfers from one consumer to another; and Business Solutions, in which the company facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The company's remaining businesses and services include its electronic-based and cash-based bill payment services and money order services.


Wex is a provider of corporate card payment solutions. The company operates in three business segments: Fleet Solutions, which provides customers with fleet vehicle payment processing services specifically designed for the needs of commercial and government fleets; Travel and Corporate Solutions, which focuses on the payment environment of business-to-business payments, providing customers with payment processing solutions for their corporate payment and transaction monitoring needs; and Health and Employee Benefit Solutions, which is a provider of integrated software-as-a-service technologies and services, healthcare premium billing, payment and workflow management.



Worldpay is a holding company. Through its subsidiaries, the company provides electronic payment processing services to merchants and financial institutions. The company operates two segments: Merchant Services, which provides merchant acquiring and payment processing services to national merchants, regional and small-to-mid sized businesses; and Financial Institution Services, which provides card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine driving and network gateway and switching services that utilize the company's proprietary Jeanie debit payment network to a set of financial institutions.

Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Dave Nicoski

Ross LaDuke

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