Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Rally Continues as USD & 10-Year Treasury Yield BreakWe continue to believe the market remains in bear market rally mode, though the Russell 2000 (IWM) has already achieved our price target at its 200-day MA, while the S&P 500 is only 2% away from hitting its 200-day MA. We have said that this is still a bear market as long as the S&P 500 and IWM are below their 200-day MAs, but, as we discussed in our Oct. 31 ETF Pathfinder, we continue to see signs that suggest reversals could be coming.
Major Bottom in Place? The U.S. dollar (DXY) is breaking its 9-month uptrend at $109.35, a strong signal it could be topping. The 10-year Treasury yield is breaking its 3.5-month uptrend. Cyclical value Sectors including Industrials (XLI), Energy (XLE, upgrading to overweight), equal-weighted Consumer Discretionary (RCD), and Financials (XLF) are all hitting 6+ month RS highs. The small-cap vs. large-cap ratio is hitting 11-month highs. Many key Sectors display bullish 7-month to YTD downtrend reversals (RCD, XLF, XLI, XLB, and XLV). The Dow Jones Industrial Average displays a bullish YTD reversal and is above its 200-day MA. Breadth remains healthy. MSCI ACWI ex-US, EAFE (ACWX, EFA), and many indexes within Europe (EURO STOXX 50, DAX, CAC 40, FTSE MIB) are reversing topside their YTD downtrends. These are all risk-on signals that suggest the bear market could be over, or at minimum, that this rally is likely to continue... see page 2 and charts throughout this report.
Actionable Industry ETFs: SOXX, COPX, IBB, and KCE... see page 9.
EM and International Markets. Both the MSCI EM (EEM) and developed int'l (EFA) are reversing topside their multi-month downtrends -- add exposure... see page 10.
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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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