EUR 217.56 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Volatility prevails

• Long-term bullish outlook remains. In our last ETF Pathfinder, we voiced our expectation for a continued period of heightened volatility marked by backing and filling. We also noted important levels on the S&P 500 that we are watching - the recent high of ~2,873 as the top-end of the range, and the recent low of ~2,532 as the bottom-end. Nothing has changed regarding these expectations, and we expect markets will continue to consolidate within the aforementioned range.

• Positive breadth divergences are evident. Helping support our long-term bullish outlook is the Discretionary/Staples ratio in new high territory, a sign of strong risk appetites... see page 3. A new development we are seeing are positive divergences in advance-decline lines, which is generally a bullish signal that points to healthy breadth and underlying strength... see below

• Big picture trends: U.S. over international; large-caps over small-caps; growth over value; overweight base metals and crude oil within commodities... see pages 2-3

• Sector overweights: Financials (XLF): Broker-dealers and securities exchanges (IAI) are leading the sector... see page 4. Technology (XLK): Leading the sector on the march to new highs are semis (SOXX/SMH)... see page 4. Materials (XLB): Steel (SLX) and Metals & mining stocks (XME, PICK) are leading the sector... see page 5. Industrials (XLI): Within transports (IYT/XTN), truckers are attractive... see page 5

• Actionable Industry ETFs: IHI, XBI, XTN, and REMX... see page 9

• International: Overweight EM (EEM), underweight developed international markets (EFA)... see page 10

• Actionable Int'l ETFs: ERUS, ENZL, EWO, EWK, EWQ, EWN, EWY, ECH, MCHI, EWZ, EZA, and THD... see pages 11-12