Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Small- and Mid-Caps to Outperform?In spite of last week's hotter-than-expected inflation reports (CPI and PPI), the S&P 500 and Nasdaq 100 (QQQ) remain above their 20-day MAs, and, more notably, the Russell 2000 (IWM) outperformed relative to the SPX and QQQ, and ended the week at YTD weekly closing highs. We believe the fact that small- and mid-caps outperformed amid hot inflation reports is a sign that we could see them continue to outperform in the weeks/months ahead, as large-caps take a breather. Our bullish outlook that we have had since early November 2023 remains intact.
Bullish Outlook Intact. The equal-weighted S&P 500 (RSP) and Vanguard Extended Market ETF (VXF) display 2-month base breakouts, while the small-cap Russell 2000 (IWM) is breaking out from a 1.5-month bull flag pattern. Several Sectors/industries display similar breakouts, including Health Care (XLV, RSPH), Industrials (XLI), Transportation (IYT), retail (XRT), global airliners (JETS), ARKK, ARKF, ARKW, IPO, and more. This broadening participation is a bullish sign as it signals healthy breadth. High yield spreads are at 2-year narrows, defensive Sectors including Staples (XLP) and Utilities (XLU) are hitting 20+ year RS lows, the U.S. dollar (DXY) is below $106, and the 10-year Treasury yield is below 4.35%. This all continues to support our bullish outlook... see charts below & page 2.
Actionable Industry ETFs: XRT, XBI, ARKF, and KCE... see page 9.
EM and Int'l Markets. MSCI EAFE (EFA) is breaking above $75-$76 resistance -- buy/stay long. Remain underweight MSCI EM (EEM)... see page 10.
Actionable Int'l ETFs: EIS, HEDJ, EDEN, EWN, KSA, EPOL, INDA, and TUR... see pages 11-12.
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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