Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Market at a CrossroadsBreadth has expanded significantly in recent weeks with the Russell 2000 (IWM) breaking above multi-year resistance at $210 (a bullish development for the broad equity market) as Technology/large-cap growth/Nasdaq 100 (QQQ) pulls back after getting extended. The QQQ violated its 20-day MA, but remains above gap support from June 12 at $467-472, a level that coincides with its 50-day MA; watch for support in this area. The S&P 500 is currently slightly below support at its 20-day MA (5540), but it is not a decisive breakdown since it has only closed below this level one day; we would need to see 2-3 closes below 5540 to signal a short-term pullback has begun on SPX. Additionally, June 12 gap support on the SPX at 5375-5409 is another support level to monitor. Considering market dynamics still suggest a risk-on environment, our bullish outlook (since early-November 2023) remains intact, and we would view any pullback as a buying opportunity.
Market at a Crossroads. The big question right now is whether recent outperformance from small-caps and value is here to stay, or if it is just a rest period for growth and large-caps before another round of outperformance. Considering long-term trends remain in place, we lean toward the latter as that is the higher probability outcome -- but nothing would surprise us... see charts below.
Risk-On Signals. Market dynamics remain bullish: high yield spreads are at 2.5-year narrows, defensive Sectors are underperforming, the MOVE index remains at 2.5-year lows, and Treasury yields, crude oil, gasoline (UGA), and U.S. dollar (DXY) are all trending sideways to lower... see page 2.
Actionable Industry ETFs: BITQ, WGMI, KBE, and ITB... see page 9.
EM and Int'l Markets. MSCI EM (EEM) remains bullish. Stay underweight MSCI EAFE (EFA) despite a constructive price pattern... see page 10.
Actionable International ETFs: INDA, EWT, TUR, GREK, EWM, DXJ, EWU, and EWS.
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.
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