Vermilion ETF Pathfinder: Actionable ETF research & Ideas
S&P 500 and Nasdaq 100 (QQQ) Testing SupportIn our 2/25/25 Compass, we discussed our expectation for near-term downside as the S&P 500 and Nasdaq 100 (QQQ) (1) could not decisively break out to new highs, (2) displayed bearish false breakouts, (3) fell back into their 2+ month trading ranges, (4) violated their 1+ month uptrends, and (5) closed below their 20-day and 50-day MAs for the first time in over a month. We also said it likely means at least another 2-4 weeks of consolidation, and that if the S&P 500 remains below 6100 and 6150 resistances, do not be surprised if there is a test of the bottom of the range at either 5770-5850 or 5600-5670, where we would be buyers (though we need 5600 support to hold in order to remain constructive). The S&P is testing major confluence of support at 5850 now, the first of our potential bottom levels. We are looking for a relief rally to start here.
Market Dynamics Remain Constructive. Market dynamics lead us to believe that this is a run-of-the-mill pullback, and a buying opportunity: (1) high yield spreads remain at 3-year narrows, (2) the U.S. dollar (DXY) and (3) 10-Year Treasury Yield have formed intermediate-term tops, (4) defensive Sectors including Staples (XLP) and Health Care (XLV) remain in long-term RS downtrends, (5) cyclical/growth Sectors (Financials, Communications, Discretionary) Sectors are generally outperforming, (6) interest rate volatility (MOVE index) remains at 3-year lows, and (7) Europe (HEDJ, EUSC) remains very bullish. While there has been mild deterioration in some of these dynamics, it is nothing we haven't seen several times during other minor pullbacks throughout this 2+ year bull market... see page 2.
Actionable Industry ETFs: IAI, KIE, BITQ, and IYZ... see page 9.
EM and Int'l Markets. Favor MSCI EAFE (EFA) over EM (EEM) as China (MCHI, FXI) may be putting-in a local top and is likely to consolidate (at minimum)... see page 10.
Actionable International ETFs: EWG, HEDJ, EUFN, EUSC, EWO, EWP, EWH, and UAE... see pages 11-13.
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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