Vermilion ETF Pathfinder: Actionable ETF research & Ideas
The major averages (S&P 500, Dow, and Nasdaq) are showing signs of stalling out, with all breaking below uptrends that began at the lows of March. While we do not want to get too far ahead of ourselves, this could very well be the beginning of the meaningful pullback that we have been concerned about. Price action today and in the coming week will help offer major clues as to whether this is yet another buying opportunity or a near-term top. We believe this is more likely to be the latter and would recommend treading lightly.· Key Levels. Not only did all the major averages break below their uptrends, but the S&P 500 failed to break above the 61.8% Fibonacci retracement level of 2,934.49. Moving forward we are watching for support at 2,795; a break below this level will mean the sellers are gaining the upper hand, however it will be hard to get too bearish as long as the S&P 500 is above this support level... see chart below and page 2.
· Small-Caps. The Russell 2000 small-cap index (IWM) is testing an important support level at $123-124. A break below this level would indicate fiuther downside is likely, but if the IWM stays above this level it would mean sellers do not yet have control of the market. Additionally, RS improvement is encouraging, but is it here to stay?... see page 2.
· Sector Laggards Remain Problematic. Financials (XLF) and Industrials (XLI) remain in RS downtrends. This is one thing that has caused us to be skeptical of this rally as major historical bottoms are characterized by outperformance from these Sectors... see page 7.
· Actionable Industry ETFs: GDX, GLD, IGV, and BBH... see page 9.
· EM and Int'l: Emerging markets (EEM) and developed int'l (EFA) failed to break above major resistance and are now breaking down from their respective bearish rising wedge patterns. This points to additional weakness ahead... see page 10.
· Actionable Int'l ETFs: EWT, QAT, EWL, and EDEN... see page 11.
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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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