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Vermilion ETF Pathfinder: Actionable ETF research & Ideas

Hanging in the balance

Last week's worse-than-expected economic data further spooked investors and reignited global growth concerns. Despite the many potential risks that we can point to for this market and the economy, thus far we are not seeing any technical breakdowns, and until we do, our neutral outlook remains appropriate.

• Cyclicals not breaking down. Key cyclical/risk-on areas of the market such as small-caps (IWM), banks (KBE), and transports (IYT) are not breaking down. As long as this continues to ring true the potential for a larger pullback in the broad market remains slim... see page 2.

• High yield spreads moving sideways; High yield bond ETFs holding above support. Trends in high yield spreads and high yield ETFs such as JNK and HYG suggest to us that the bond market is not flashing any major warning signs as it relates to the potential for a near-term recession... see page 2.

• Copper and WTI crude remain above support. Moves in these two commodities are closely tied with global growth/demand expectations. Neither are breaking down, which helps support our neutral outlook... see page 2.

• Actionable Industry ETFs: SOXX, IGV, ITA, and CRAK... see page 9.

• EM and Int'l: Developed international (EFA) and EM (EEM) equities remain in downtrends, however both are potentially making a higher low relative to the lows set in August -- an encouraging sign. Additionally, RS on the EEM is on the cusp of a bullish reversal, something that would be a welcomed sight for global risk sentiment... see page 10.

• Actionable Int'l ETFs: EWJ, EWT, EWW, and EWZS... see page 11.