Report
Dave Nicoski ...
  • Ross LaDuke
EUR 221.78 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Constructive Pullback

Coronavirus concerns are hitting stocks due to prospects of lower economic growth. A question we ask ourselves is whether the worst of the declines are behind us and that the pullback is likely to be a buying opportunity, or is this the beginning of a much larger correction? We lean towards the former, and believe this to be a healthy and constructive pullback of the 5-7% variety in the S&P 500 (peak-to-trough is currently -3.7%). We explain our thought process below.

• Bent, Not Broken. Several key areas of the market have deteriorated, however none are truly breaking down. This includes copper (CPER) and crude oil (DBO), Treasury yields, high yield bond ETFs (JNK, HYG), global equities (ACWI), small- and mid-caps (IWM, IWR), Energy (RYE), Materials (XLB, XME), Transports (IYT), and Banks (KBE, EUFN). If these areas break down, that will give us reason to believe a deeper pullback may be in the cards... see charts below and pages 2-4.

• Upgrades & Downgrades. We are upgrading Staples, Real Estate, and Utilities to market weight due to bullish RS reversals. Additionally, we are downgrading Energy and Materials to underweight due to RS breakdowns. Lastly, RS has settled-in to a horizontal range for Health Care and Industrials, both of which we are downgrading to market weight... see charts below and Sector comments on pages 5-10.

• Actionable Industry ETFs: IPAY, IGV, ITB, and IAI... see page 11.

• EM and Int'l: Foreign equities (EEM, EFA) are pulling back... see page 12.

• Actionable Int'l ETFs: EWW, RSX, RSXJ, EWZS, EUMV, EWL, EDEN, and EIRL... see pages 13-14.
Underlyings
Invesco DB Oil Fund

Invesco S&P 500 Equal Weight Energy ETF

Invesco S&P 500 Equal Weight Industrials ETF

Invesco S&P 500 Equal Weight Materials ETF

iShares iBoxx $ High Yield Corporate Bond ETF

iShares MSCI ACWI ETF

ISHARES MSCI BZL

iShares MSCI Denmark Capped Investable Mkt Indx Fd

iShares MSCI Europe Financials

iShares MSCI Europe Minimum Volatility ETF

iShares MSCI Ireland Capped ET

iShares MSCI Mexico Capped ETF

iShares MSCI Switzerland Cappe

iShares North American Tech-Software ETF

iShares Russell 2000 Index Fund

iShares Russell Mid-Cap ETF

iShares Transportation Average

ISHARES U.S. BROKER-DEALERSETF

iShares U.S. Home Construction

Market Vectors Russia Small-Cap ETF

Materials Select Sector SPDR Fund

PureFunds ISE Mobile Payments ETF

REAL ESTATE SPDR

Select Sector SPDR-Consumer Discretionary

Select Sector SPDR-Consumer Staples

Select Sector SPDR-Energy

Select Sector SPDR-Financial

Select Sector SPDR-Health Care

Select Sector SPDR-Technology

Select Sector SPDR-Utilities

SPDR Barclays High Yield Bond ETF

SPDR KBW Bank ETF

The Communication Services Select Sector SPDR Fund

United States Copper Index Fund

VanEck Vectors Russia ETF

Provider
Vermilion Research
Vermilion Research

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.

Analysts
Dave Nicoski

Ross LaDuke

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