Vermilion ETF Pathfinder: Actionable ETF research & Ideas
A defensive shift as volatility returnsA multitude of concerns including rising interest rates, China-U.S. trade tensions, fears of margin contraction, and a tight labor market has led to a breakdown in the S&P 500's uptrend. Our outlook is extremely cautious. And, to the extent that none of the aforementioned concerns have been resolved, we are likely to see a prolonged period (likely several weeks) of consolidation, volatility, and lower prices as the market attempts to find a bottom. In addition, we believe a retest of the early-2018 lows - and potentially lower – cannot be dismissed.
• Market internals deteriorating. Examining the percentage of stocks above their 50- and 200-day moving averages within the S&P 500 points to the market being extremely oversold on a short-term basis. Additionally, breaks in both the advance-decline (A/D) line and the equal-weight cyclicals (RCD) vs. staples (RHS) ratio provide further evidence for our concerns about the health of the broad market... see below and page 2.
• Sector recommendation changes. RS improvements for Staples (XLP), Communication Services (XLC), and Utilities (XLU) has led us to upgrade each Sector. Conversely, price and RS trends for Industrials (XLI) and Energy (XLE) have substantially deteriorated, and we are downgrading both Sectors to underweight.
• Actionable Industry ETFs: IHI, XHS, IHF, PPH... see page 10.
• Int'l and EM. Developed int'l ETFs (VEA, EFA) have broken down below support -- avoid. Broad EM (EEM, VWO) remains in price and RS downtrends - stay underweight... see page 11.
• Actionable Int'l ETFs. DXJ, EWJ, EIS, and NORW... see page 12.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.