Alt Momentum Widens as Semis Break Out

Alternative momentum was highly dispersed, with VanEck Semiconductor ETF surging to 26.6% while iShares Bitcoin Trust remained weakest at -13.2%.

VanEck Semiconductor ETF (SMH) dominated the alternatives space as three-month momentum — the rate at which price has changed over the past 13 weeks — surged to 26.6%, up 10.7 points on the week. SMH was extended deep into strongly positive territory, accelerating and near its own 1-year high. iShares MSCI USA Momentum Factor ETF (MTUM) rose to 10.0%, up 3.7 points. Global X U.S. Infrastructure Development ETF (PAVE) climbed to 9.8%, up 3.0 points, and iShares US Technology ETF (IYW) advanced to 8.8%, up 3.7 points. Linkage (how closely an ETF's momentum tracks broad equity moves) was highest in the technology-heavy names.

Within the group, breadth was 61.5%, leaving a mixed regime rather than a uniform risk-on read. Dispersion was extreme. The spread between SMH at 26.6% and iShares Bitcoin Trust (IBIT) at -13.2% was 39.8 points. SMH and MTUM both posted a breakout, with SMH extending gains and MTUM doing the same near its own 1-year high. PAVE looked to be establishing a base after moving to 9.8%, while Vanguard Real Estate ETF held in strongly positive territory at 6.4%, up 0.9 points.

At the other end, the laggards stayed deep in negative territory even as a few attempted to stabilize. IBIT improved to -13.2%, up 5.8 points, still the weakest fund in the group but halting momentum decay. iShares Biotechnology ETF (IBB) fell to -3.1%, down 7.1 points. VanEck Gold Miners ETF (GDX) dropped to -11.8%, down 15.0 points, deteriorating at depth and near its own 1-year low. iShares Preferred and Income Securities ETF (PFF), iShares MSCI USA Min Volatility ETF (USMV), IBB and GDX all recorded a negative sign flip.

That left alternatives running a barbell between accelerating semiconductor and factor strength and a growing drawdown (a sustained period of falling momentum from a recent peak) in defensive and commodity-linked laggards.

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Romain Gandon

CEO, Quantlake

Disclaimer: This report is for informational and educational purposes only and does not constitute investment advice.

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