Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Upgrading Consumer Discretionary; Outlook increasingly bullishUpgrading Consumer Discretionary. The XLY's price and relative strength are breaking topside resistance to new highs... see below (right) and page 5.
Market outlook and internals. Market internals continue to improve, which bolsters our increasingly bullish outlook. The Cyclicals vs. Staples ratio (XLY/XLP) continues to advance to new highs, confirming a risk-on environment. Also, one of the few previously concerning indicators we've highlighted has been the SPY's percentage of stocks above their 200-day moving average. Our concerns with this indicator have been largely alleviated, as this indicator recently hit a new high... see below.
Big picture trends. Interest rates: Though our list of concerns is dwindling, interest rates remain a question mark. The USD: The DXY has finally lost some steam, finding resistance at 95. Commodities: Broad commodities (DBC) and oil prices (DBO, BNO) have pulled back to logical entry points. Add exposure/remain overweight. Additional reiterations: favor small-caps over large-caps, and growth over value... see pages 2-3.
Sector overweights: Technology (XLK): stick with software (IGV, XSW). Financials (XLF): favor small-caps (PSCF) and regional banks (KRE). Energy (XLE): focus on E&P (IEO, XOP) and refining (CRAK) groups. Discretionary (XLY): buy retail (XRT, RTH) on weakness... see pages 4 and 5.
Actionable Industry ETFs: IPAY, CRAK, XRT, and IYT... see page 9.
International: We continue to view $45 as critical price support for EM (EEM) on both a short- and long-term basis. Relative strength remains near an all-time low for developed international markets (EFA). Be selective... see page 10.
Actionable Int'l ETFs: MCHI, THD, EPU, EWC, SCZ, EWJ, EWH, EWS, ENZL, EWU, EWQ, EFNL, ENOR, and EIRL... see pages 11-14.
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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