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Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Bullish Yet Vigilant

In our 6/8/20 ETF Pathfinder we noted a bullish outlook was warranted, but that equities were extended and that we would be buyers on a pullback. Now that markets have pulled back, the question is whether this is just a countertrend move within the ongoing bullish trend, or the beginning of a bigger correction. For now we remain bullish and believe this to be a buyable pullback. Below we highlight key developments we are watching, including what it would take for us to alter our bullish outlook.

· What Would Alter Our Bullish Outlook? Key support levels we are watching include the 2940-2980 zone on the S&P 500, 9500 on the Nasdaq 100 (or $231.50 on the QQQ), and $133 on the Russell 2000 (IWM). A break below these support levels would be a bearish trend change, which would signal additional downside is likely and a more cautious outlook would be warranted. We remain positive as long as these support levels hold... see charts below and page 2.

· Health Care & Consumer Staples. Bullish RS inflections in these Sectors gives us reason for pause as they have been the two pure defensive Sectors amid the coronavirus. Additionally, the last time these two Sectors made similar bullish RS inflections was on February 24, when the coronavirus meltdown began. If outperformance continues for Staples and Health Care, it could spell issues for the broad market... see page 2.

· Actionable Industry ETFs: XBI, BBH, GDX, and SIL... see page 9.

· EM and Int'l: Emerging markets (EEM) and developed int'l (EFA) ETFs are consolidating recent gains; we remain bullish from a price perspective as long as their respective support levels hold... see page 10.

· Actionable Int'l ETFs: EWT, RSXJ, EWN, and EWL..