EUR 233.53 For Business Accounts Only

Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Market purgatory continues

Despite the generally positive developments highlighted below, our outlook remains neutral and we see the S&P 500 remaining rangebound between support at 2,720-2,730 and resistance at the all-time highs of 2,954. We continue to believe an eventual breakout or breakdown is likely to be the deciding factor as to where the market is headed next.

• U.S. dollar. The U.S. dollar has weakened and is testing critical support. We continue to believe further weakening has the potential to save global risk assets by providing a tailwind for EM/foreign equities and the commodity structure... see chart below, right.

• Risk appetites stabilizing. Following concerning moves in May, several important risk barometers have stabilized - a welcomed sight for equities and the economy. Specifically, the 10-year Treasury yield, high yield spreads, copper and oil prices, and Discretionary vs. Staples ratios have all stabilized... see page 2.

• Big picture trends. Gold (GLD) is approaching a major resistance level and RS reversal. The growth (IWF) vs. value (IWD) ratio shows value is chipping away at growth's leadership status. The small- (IWM) vs. large-cap (IWB) ratio continues to show a preference for large-caps... see page 3.

• Actionable Industry ETFs: TAN, XAR, IHI, and ITB... see page 10.

• EM and Int'l: Both developed (EFA) and EM (EEM) equities are holding at important support levels and appear to be bottoming. We view this as constructive; what is good for foreign equities is good for U.S. markets as well... see page 11.

• Actionable Int'l ETFs: FEU, EWQ, EWN, EWA, ENZL, RSXJ, and FM... see pages 12-13.