Vermilion ETF Pathfinder: Actionable ETF research & Ideas
U.S. Dollar, broad commodities, and interest rates on the rise• Big picture trends: The USD, commodities, and interest rates. The USD (UUP) has broken topside its downtrend - a bullish development... see below. In a break from the traditional inverse relationship between the dollar and commodities (DBC), the latter remains on bullish footing, and oil prices (DBO, USO, BNO) continue to lead the advance - remain overweight. Also on the rise is the 10-year Treasury yield, which is testing 3.00% resistance... see page 2.
• Market internals and outlook: With support levels holding for the primary market indexes and various breadth indicators showing marginal improvements, our neutral but constructive outlook remains intact. While we remain constructive, the one negative breadth signal, % of stocks above their 200-day moving average, continues to give us pause... see page 3.
• Market cap and style: We remain market cap neutral. Continue to favor growth over value. Cyclicals still outperforming defensive sectors... see page 4.
• Sector overweights: Technology (XLK): Software (IGV/XSW) is current leadership within Tech. We reiterate: add exposure... see page 5. Financials (XLF): Overweight broker-dealers and securities exchanges (IAI), which continue to outperform... see page 5. Industrials (XLI): We reiterate our overweight Aerospace & Defense (ITA/XAR/PPA) recommendation.... see page 6.
• Actionable Industry ETFs: XOP, XAR, SKYY, IPAY, FDN, CIBR, IHF, and IAI... see pages 10-11.
• International: Relative strength for developed international markets (EFA) has continued to improve in recent weeks, and we are gradually becoming more constructive. As long as support levels continue to hold, we see recent EM (EEM) weakness as a buying opportunity... see page 12.
• Actionable Int'l ETFs: SCZ, EWI, ENOR, EWO, EWS, EWU, EWQ, EWY, EWM, THD, EPU, and ECH... see pages 13-15.
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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