EUR 222.66 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Opportunities in energy, biotechs, and international.

Highlighted themes and actionable charts:

• Big picture: bullish. Our bullish stance, predating last year's Presidential elections, remains intact. Short-term jitters have not reversed long-term trends, and (most) cyclical sectors continue to outperform.

• Style: Rotate into small caps. The small/large-cap ratio is bullishly inflecting in favor of small caps, extending the this ratio's 11-year tradition of tactical whipsaws... see page 2

• Style: Tactical opportunity in value. While long-term trends still favor growth, value is beginning to strengthen, aided by energy, and offering an attractive tactical opportunity... see page 2

• Sectors & Industries: Buy energy and biotechs. Energy stocks are finally playing catch-up to stabilizing crude prices. The XLE just reversed its 10-month decline, marking a bullish trend reversal. It's premature to label this sector as leadership, but the stabilization and expansion in breadth is a welcomed change. Within health care, another attractive sector, biotechs exhibit a short-term buying opportunity. Take advantage of the recent weakness in IBB... see page 3

• International: The U.S./Int'l ratio is topping. We still favor rotating out of the U.S. and into foreign markets, especially EM. This view is based on (1) the topping SPY/ACWX ratio and (2) the widespread base patterns visible throughout EM, Europe, and Japan. Actionable ideas: In developed, Germany (EWG); in EM, Russia (RSX)... see page 4

For a trial to Vermilion Research visit www.verilioncap.com or call our sales team at (952) 922-7500.