EUR 46.59 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Bear Market Rally Underway

Key supports including the 200-week MA on the S&P 500 and $163 on the Russell 2000 (IWM) have held strong, and the S&P 500, IWM, and Nasdaq 100 (QQQ) have all reversed topside their 2-month downtrends. As discussed in our previous ETF Pathfinder (Oct. 17), this is precisely what we needed to see in order to confirm that a bear market rally is underway. Longer-term, this is still a bear market until the S&P 500 and Russell 2000 can break above their respective 200-day MAs (which are our current targets for this bear market rally), but there are signs that suggest reversals could be coming.

Major Bottom in Place? While we would like to see the S&P 500 and Russell 2000 (IWM) break above their respective 200-day MAs in order to declare the bear market over, there are some early signals that suggest it could happen; Financials (XLF) are reversing their YTD downtrend, Health Care (XLV) is reversing its 6.5-month downtrend, and the Dow Jones Industrial Average is already testing its YTD downtrend and 200-day MA... see chart below and pages 4 and 5.
Commodities, U.S. Dollar (DXY), 10-Yr Treasury Yield. We continue to monitor this trio for signs of tops; we believe at least two of these three need to start new downtrends in order for the broad equity market to establish a reliable bottom. The DXY and Treasury yields are finally showing signs of weakness, while the Bloomberg Commodity index (DJP) continues to consolidate... see page 2.
Actionable Industry ETFs: IBB, XBI, IAI, and KIE... see page 9.
EM and International Markets. Continue to avoid exposure to MSCI EM (EEM) and developed int'l (EFA)... see page 10.
Actionable International ETFs: GREK, EWW, EWI, and EIRL... see page 11.