Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Bullish technical mode still in the “on†position.Highlighted themes and actionable charts:
• Big picture: bullish. Up-and-to-the-right remains the path of least resistance. A variety of factors support a risk-on environment and our bullish outlook, including: (1) major indices are trading at new highs; (2) small caps have assumed a leadership role; (3) cyclicals are leading; (4) defensive sectors are trading near 12-month relative strength lows; and (5) international markets, led by EM, continue to strengthen. Stay the course.
• 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: Growth still leads, but value reveals opportunities. While long-term trends still favor growth, value is beginning to strengthen, aided by a recovery in energy and financials... see page 2
• Sectors & Industries: Buy industrials (XLI), financials (XLF), energy (XLE), biotechs (IBB), and global miners (PICK). Cyclical sectors and industries continue to present attractive set-ups. Biotechs are particularly appealing, with the IBB exhibiting a short-term consolidation following a base breakout... see pages 3-5
• International: Overweight int'l, underweight U.S. The U.S./International ratio (SPY/ACWX) continues to roll over in favor of foreign markets. Emerging markets are driving this trend, but Japan and Europe, too, are beginning to outperform. Actionable country-specific ETFs: Germany (EWG), Japan (DXJ), and Switzerland (EWL)... see page 6-7
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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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