Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Long-Term Shift To Value UnderwayWe believe the weight of the evidence suggests a mixed, but overall constructive market, and we continue to favor buying pullbacks to the 4000-4040 range on the S&P 500. We also explain why we believe value's outperformance is in its early stages.
S&P 500. The S&P 500 has pulled back after being extended as it ran into resistance at the megaphone pattern. We believe pullbacks should be treated as buying opportunities and we are constructive as long as the S&P 500 is above major 4000-4040 support. Add exposure to cyclical value areas on pullbacks (Energy, Financials, Materials, and Industrials)... see page 2.
Value vs. Growth. Small- and mid-cap value vs. growth ratios display major 4.5-year bullish reversals in favor of value, and we believe it is only a matter of time before large-caps follow suit. These reversals are an important signal that tells us outperformance from value is likely in the early stages -- overweight value and avoid growth where possible as it is currently the primary problem area within the market... see charts below.
Big Picture Trends. The US dollar (UUP) is heading lower. Commodities (DJP) remain bullish with WTI crude oil (DBO) on the cusp of major breakout. Treasury yields are stable and consolidating. High yield spreads remain devoid of bullish inflections. These are all risk-on signals for the broad equity market... see page 2.
Actionable Industry ETFs: IEO, GDX, URA, and XME... see page 9.
EM and International Markets. We now favor developed int'l (EFA) over emerging markets (EEM), largely due to outperformance from value -- for which EAFE has a larger weighting... see page 10.
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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