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Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Upgrading Staples, Downgrading Energy

We are downgrading our outlook to neutral as a result of several negative developments, including breakdowns for EM (EEM) and China (MCHI, FXI), steep price and RS uptrend violations for Technology (XLK, RYT), improving RS for defensive areas of the market, weakness in “Dr.” copper, and crude oil's breakdown.

• Key levels on S&P 500, U.S. dollar. Our neutral outlook is supported by a consolidating market and a number of mixed technical signals. On the S&P 500 we are watching for support at 2,800 (with secondary support at the 200-day MA) and resistance at the 5/1/19 all-time high of 2,954. On the equal-weighted S&P 500 we are watching for support at the 200-day MA and 4,125. An eventual breakout or breakdown is likely to be the deciding factor as to where the market is headed next. Additionally, we are watching the U.S. dollar for signs of weakening - something we believe can save this market... see pages 2-3.

• Sector Weighting Changes. We are upgrading Staples (XLP) to market weight and downgrading Energy (RYE) to underweight... see charts below and Sector comments on page 5 (Staples) and page 9 (Energy).

• Actionable Industry ETFs: VOX, IGV, IPAY, and ITB... see page 10.

• EM and Int'l: EM equities (EEM, VWO) are breaking down and are poised to test the 2018 lows. Developed int'l (EFA, VEA) ETFs still look as though they are bottoming and are testing critical support levels. Breakdowns would be cause for concern and would put a major damper on risk sentiment... see page 11.

• Actionable Int'l ETFs: FEU, EWG, EWL, EWI, EWA, ENZL, ERUS, and GREK... see pages 12-13.