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Vermilion ETF Pathfinder: Actionable ETF research & Ideas

tick With Value; Gold Breaking Out

As noted in our last ETF Pathfinder (Jan. 31), we remain bearish on the Russell 2000 index (IWM) and Russell Micro Cap index (IWC) as long as they remain below important resistance levels of $208 and $134, respectively. Additionally, we noted our expectation for sideways consolidation on the S&P 500 and Nasdaq 100 (QQQ), but that as long as 4257 and $334 supports hold, respectively, we cannot get too bearish. These levels have held, however we will reiterate that breaks below these levels would signal additional downside (potentially another 8-10%) ahead.

Stick With Value. The path of least resistance remains higher for 10- and 30-year Treasury yields which continues to support our case for value over growth. Additionally, the Russell 1000 Value vs. Growth ratio is reversing topside a 5-year downtrend, signaling a long-term shift in favor of value... see chart below.
Big Picture Trends. Commodities (DJP) remain bullish, and that includes crude oil (DBO), base metals (DBB), agricultural commodities (DBA), and now gold (GLD) -- add exposure on pullbacks and buy gold miners as well. High yield spreads display a concerning trend... see page 2.
Actionable Industry ETFs: GDX, XME, PICK, and BOAT... see page 9.
EM and International Markets. Emerging markets (EEM) display a bullish RS reversal, however price remains in a downtrend. Developed int'l (EFA) is testing major base support at $75... see page 10.
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