Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Upgrading Utilities to OverweightOur long-term outlook remains neutral on the S&P 500 as of our 8/6/24 Compass, after being bullish since early-November 2023. We believe we are not yet out of the woods as we still see the S&P 500 and Nasdaq 100 (QQQ) as going through a 1- to 4-month pullback/consolidation period, and market dynamics remain a concern. Current price action on the S&P 500 is extremely similar to prior major topping patterns that occurred in April 2000 and August 2007, with 2007 being the best comparison. Note that the Fed was getting ready to cut rates and recession indicators that have already triggered such as the Sahm rule and Schannep Recession Indicator were also triggered in early-2001 and early-2008. This comparison and continued outperformance from defensive Sectors remain our top concerns. We view this as an ideal time to reduce risk and shift to defensives with the S&P 500 back near YTD highs and testing resistance in the 5670-5783 range.
Upgrading Utilities. We are upgrading Utilities (XLU) to overweight; price remains bullish with the uptrend intact on the XLU, and RS has formed a gradual uptrend -- buy pullbacks. Bottoming RS for Utilities and other defensive Sectors (Health Care, Staples, and Real Estate) is a clear risk-off signal..
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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