EUR 46.63 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Testing YTD Lows; 2.5-Yr Commodity Uptrend Breaking
In our previous ETF Pathfinder (Sept. 6) we discussed how key supports were being tested at 3900 on the S&P 500, $293-294 on the Nasdaq 100 (QQQ), and $178 on the Russell 2000 (IWM), and that breaks below these levels would virtually guarantee a test of the YTD lows -- or worse. Those support levels have broken, and we are now getting a test of the YTD lows. With so many indexes and key Sectors (e.g., Financials, Industrials, Technology) currently oversold and testing support, we could certainly see a bounce/pause at current levels. Regardless, we will need to see reversals of the 6-week downtrends in order to confirm that a tradable rally is underway. Until that happens, we prefer to be defensive... see charts below and pages 3 & 6.
U.S. Dollar (DXY), 10-Yr Treasury Yield, Commodities. As we have said for months, until we see breakdowns from topping patterns on at least two of these three -- the DXY, 10-yr Treasury yield, and commodities (esp. crude oil) -- market indexes will have difficulty establishing a reliable bottom. On a positive note, we may be seeing commodity prices going through a topping process, something we have discussed over the past month. On a much more problematic note, the DXY and Treasury yields continue to make new highs, showing no definitive signs of topping; these continue to be two major risk-off signals that suggest rangebound price action on the market indexes is a best-case scenario... see page 2.