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Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Market remains indecisive

• Outlook and breadth indicators are mixed: Last week's retest of the S&P 500's 200-day moving average has held, a critical support level, but a long-term breadth indicator has shown deterioration. That is, during the recent retest, a higher percentage of S&P 500 constituents closed below their respective 200-day moving average... see below. Other indicators such as the Discretionary/Staples ratio, Advance-Decline lines, and the percentage of stocks above their 50-day moving average remain constructive, which collectively provide a mixed outlook. We continue to expect further volatility and consolidation, with the recent S&P 500 high of ~2,873 as the top-end of the range, and the recent low of ~2,532 as the bottom-end.

• Big picture trends: 10-year yield moving lower; large-caps over small-caps; growth over value; overweight crude oil (DBO/USO/BNO) within commodities... see pages 2-3.

• Sector overweights: Financials (XLF): Electronic Exchanges/Markets are leadership... see page 4. Technology (XLK): Internally, semiconductors (SOXX/SMH) have been long-term leadership. Use recent weakness to add exposure... see page 4. Industrials (XLI): Transports (IYT/XTN) and Aero/Defense stocks (ITA/XAR/PPA) are outperforming... see page 5.

• Actionable Industry ETFs: FBT, CUT, IAI, and IYT... see page 9.

• International: No changes. Overweight EM (EEM) and underweight developed international markets (EFA)... see page 10.

• Actionable Int'l ETFs: EWM, ARGT, EGPT, ERUS, ENZL, EWO, EWY, ECH, MCHI, EWZ, EZA, and THD... see pages 11-13.