Breadth Narrows Into Growth Leadership

At the close, we saw equity participation narrow hard across our ETF universe. 36 of 59 equity ETFs (61%, -13.6pp on the day) held above their 20-day moving average, while only 9 of 58 (16%, -1.7pp) outperformed SPY on a 20-day basis, leaving a +45pp abs/rel gap that keeps the regime mixed rather than broadening. We are left with leadership concentrated in US growth, Taiwan and South Korea, with technology and Energy XLE carrying the relative tape, while low-volatility, developed ex-US and value- and dividend-heavy US beta lose ground; Emg. Markets EEM sits in the divergent bucket, which tells us price has held up better than sponsorship.

In fixed income, we have moved further into defensive rotation. Just 4 of 17 bond ETFs (24%, -23.5pp) held above their 20-day moving average, yet 11 of 16 (69%, +12.5pp) beat AGG, creating a -45pp gap as intermediate Treasuries, short duration, inflation-linked bonds, munis and preferreds hold the relative line while long duration, Mortgage-Backed MBB and investment-grade credit lag.

Specialty still shows surface strength, but we are not getting much confirmation: 11 of 15 ETFs (73%, -6.7pp) stayed above their 20-day moving average as relative breadth fell to 3 of 15 (20%, -6.7pp), with semiconductor exposure and momentum holding up while Bitcoin Trust IBIT and Ethereum Trust ETHA lose sponsorship versus equities. In commodities, Agriculture Basket DBA improved versus SPY from a still-negative 20-day return base, while Copper CPER slipped below its 20-day moving average.

20-Day Tactical Breadth

Key Takeaways

• Across daily, weekly and monthly views, we still see the strongest equity alignment in Taiwan equity EWT, South Korea equity EWY and US growth IYW, QQQ and SPYG. The lagging side is much broader: low-volatility, developed ex-US, equal-weight, quality, dividend and value-oriented US beta, plus several defensive sectors, are all lined up negatively across timescales.

• Within bonds, we have an explicit duration split. Int. Treasuries IEI and VGIT improved versus AGG alongside Short Corporate VCSH, VTIP and TIP, whereas long duration, Mortgage-Backed MBB and investment-grade corporates LQD and VCIT remain the weak side of the bucket. High Yield HYG and High Yield Bonds JNK are only outperforming AGG while sitting below their 20-day moving averages, so we treat that as relative hold-up rather than confirmed leadership.

• We would separate stabilization from leadership in the cyclical commodity complex. Energy XLE crossed above its SPY ratio average with a still-negative 20-day return, and the cross-timescale commodity leaders remain concentrated in agriculture, broad commodities and oil; that leaves the improvement early, especially after Copper CPER lost its 20-day moving-average support.

FEATURED ETF — Energy Select Sector XLE vs SPY

Other Technical Signal Events

EQUITY

Absolute Price Signals

Below 20D moving average

• iShares MSCI Intl Momentum Factor ETF IMTM (20D perf: +5.32%)

• Industrial Select Sector XLI (+5.07%)

• Vanguard FTSE Developed Markets VEA (+4.68%)

• iShares MSCI India ETF INDA (+4.68%)

• iShares MSCI Germany ETF EWG (+4.21%)

• Communication Services Select Sector XLC (+4.00%)

• iShares International Select Dividend ETF IDV (+2.26%)

• Utilities Select Sector XLU (-0.46%)

Relative Strength Signals (vs SPY)

Above 20D moving average

• Energy Select Sector XLE (20D relative perf: -11.93%)

Below 20D moving average

• iShares MSCI Emerging Markets ETF EEM (20D relative perf: +0.89%)

• SPDR® S&P 600 Small Cap Value ETF SLYV (-1.45%)

FIXED INCOME

Absolute Price Signals

Below 20D moving average

• iShares J.P. Morgan USD Emerging Markets Bond ETF EMB (20D perf: +2.17%)

• SPDR® Bloomberg High Yield Bond ETF JNK (+1.37%)

• iShares iBoxx $ High Yield Corporate Bond ETF HYG (+1.20%)

• Vanguard Short-Term Corporate Bond VCSH (+0.25%)

Relative Strength Signals (vs AGG)

Above 20D moving average

• Vanguard Intermediate-Term Treasury VGIT (20D relative perf: -0.24%)

• iShares 3-7 Year Treasury Bond ETF IEI (-0.19%)

• Vanguard Total International Bond BNDX (-0.19%)

Below 20D moving average

• iShares MBS ETF MBB (20D relative perf: unch.)

SPECIALTY

Absolute Price Signals

Below 20D moving average

• iShares Ethereum Trust ETF ETHA (20D perf: +6.44%)

Relative Strength Signals

Below 20D moving average

• iShares Bitcoin IBIT (20D relative perf: +1.69%)

COMMODITIES

Absolute Price Signals

Below 20D moving average

• United States Copper LP CPER (20D perf: +4.47%)

Relative Strength Signals

Above 20D moving average

• Invesco DB Agriculture DBA (20D relative perf: -5.96%)

Romain Gandon

CEO, Quantlake

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