Vermilion ETF Pathfinder: Actionable ETF research & Ideas
S&P 500 at new all-time highs with uptrend intactRisk-on. The S&P 500 has surpassed the January all-time high, staying above this level for over a week. What's more important is the 5-month uptrend remains intact and cyclical/risk-on areas are reasserting their leadership status. Think technology, discretionary, and biotech/medical devices - all current overweights. At the same time, defensive areas have petered out in terms of relative strength, exactly what we want to see in a healthy bull market. Notwithstanding normal countertrend pullbacks, we expect to stay in the bull camp as long as the uptrend remains intact... see chart below.
• Upgrading industrials to market weight, downgrading financials to market weight. We are upgrading industrials (XLI) due to RS stabilization and the decisive move topside $77 on the XLI. Adding to our confidence is continued price and RS improvements from aero/defense (XAR, ITA), machinery, conglomerates (MMM, HON), and the equal-weighted sector (RGI). Add exposure. Conversely, we are downgrading financials due to RS deterioration for regional banks (KRE), small-caps (PSCF), and large-caps (XLF)... see pages 5-6.
• Big picture trends. Market internals including the cyclicals vs. staples ratio and advance/decline lines are confirming the market's advance. We also provide updates on growth (IUSG) vs. value (IUSV), the USD (UUP), small-caps (IJR) vs. large-caps (SPY), and commodities... see pages 2-3.
• Sector overweights: Technology (XLK), Consumer Discretionary (XLY), and Health Care (XLV)... see pages 4-5.
• Actionable Industry ETFs: XRT, IBUY, XPH, and XAR... see page 9.
• Int'l and EM. Remain underweight broad int'l ETFs (EEM, VEA, EFA, and ACWX) as long as price and RS downtrends remain intact... see page 10.
• Actionable Int'l ETFs. INDA, EPOL, EIS, and ITEQ... see page 11.
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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