Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Upgrading Energy to Market WeightBetter economic data and optimism surrounding US-China trade (notwithstanding last Friday) has put a floor under Treasury yields and has led investors to take profits from large-caps, growth, and defensive areas of the market and migrate to small-caps, value, and cyclical segments of the market. While this shift has been a welcomed sight for the prospects of a broad-based move higher, several key risk-on areas of the market have thus far failed to break above resistance, leaving our overall neutral outlook intact.
• Upgrading Energy. We are upgrading Energy to market weight due to bullish price and RS reversals in the XLE and a breakout in WTI crude oil... see charts below and page 8 for additional Sector commentary.
• Positive developments. The small- vs. large-cap ratio (IWM/SPY) exhibits a bullish reversal and the uptrend in the growth vs. value ratio (IUSG/IUSV) is breaking down, both of which have historically been positive indicators for economic growth and a risk-on environment... see page 2.
• Risk-on areas still below resistance. Several key cyclical/risk-on areas of the market remain below important resistance levels, suggesting the broad market is not yet out of the woods... see page 2.
• Actionable Industry ETFs: IEO, PJP, SIL, and XAR... see page 9.
• EM and Int'l: Developed (EFA) and EM (EEM, VWO) ETFs continue to make lower highs and lower lows, something that is a concern for both foreign and U.S. equity markets. Remain underweight... see page 10.
• Actionable Int'l ETFs: EWJ, EWC, EWN, EWW, EWT, and EWZS... see pages 11-12.
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.
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