EUR 47.74 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Prior Concerns Becoming Tailwinds

Several concerns that we have previously noted as being risks to our bullish outlook are now becoming tailwinds. This includes interest rates which are now moving higher and price and RS improvements for cyclical value Sectors. As a result we remain bullish and we believe the path of least resistance remains higher.

· 10-Year Treasury Yield Reversing Higher. Earlier this week the 10-year Treasury yield made a bullish reversal, and we now see the short-term path of least resistance as being higher for yields; 0.75% followed by the June highs of 0.95% are likely near-term targets. This move higher in yields helps to significantly alleviate concerns for the broad equity market as it signals an improving economic outlook... see page 2.

· Rotations Into Cyclical Value. Cyclical value areas enjoying price and RS improvement include Financials (banks), Consumer Discretionary (retail, major autos), Transportation, Industrials, and Materials. These types of healthy rotations help give us confidence that this bull market can continue... see charts below and on page 2.

· S&P 500. The S&P 500 remains in an uptrend as it tests the highs from February. 3280 and 3200 are short-term support levels to watch. If the S&P 500 is above these levels we believe a bullish stance remains appropriate.

· Actionable Industry ETFs: SOXX, XRT, ITB, and COPX... see page 9.

· EM and Int'l: Price and RS trends remain constructive for emerging markets (EEM). Additionally, developed int'l (EFA) is breaking above key resistance. This is bullish for global equities... see page 10.