Daily Tactical: Equity Breadth Breaks Lower as Defensives Lead

Price damage spread faster than relative leadership recovered

At the close, our equity coverage turned narrower and more defensive. Only 24 of 59 ETFs (41%, -18.6pp) held above their 20-day moving average, while just 12 of 58 beat the S&P 500 SPY (21%, +5.2pp), leaving a +20pp gap. US growth, healthcare and low-volatility themes carried relative leadership. Emerging markets, Europe and cyclical US exposures broke lower in price. The relative breadth figure came off a very weak base. Across our universe, the session was concentration and defense rather than broad confirmation.

In fixed income, price damage deepened even as relative rotation stayed active. 0 of 17 ETFs (0%, -5.9pp) held above their 20-day moving average, yet 9 of 16 still outperformed the Aggregate Bonds AGG (56%, -12.5pp), a -56pp gap. Short-duration, inflation-linked and muni exposure held leadership. Long-duration Treasuries and investment grade credit lost ground.

Specialty remained uneven, with 7 of 15 ETFs (47%, unchanged on the day) held above their 20-day moving average but only 3 of 15 outperformed the S&P 500 SPY (20%, +6.7pp), leaving a +27pp gap. Semiconductors and managed futures held up better than clean energy and equity-income recoveries. In commodities, Copper CPER weakened both outright and versus the S&P 500 SPY. Oil and broad commodity exposure remained the firmer themes across that bucket.

20-Day Tactical Breadth

Key Takeaways

• Taiwan EWT with a +7.54% period return crossed below its 20-day moving average. Developed Markets VEA, Europe VGK, and Germany EWG also crossed down, keeping international equity on the weak side of participation.

• On the relative side of equity, Global Min Vol ACWV, Dividend Quality SCHD, and Healthcare XLV crossed above their ratio moving average versus S&P 500 SPY, but all three still show negative 20-day returns. We read that as early stabilization in defensive leadership.

• Within specialty and fixed income, Managed Futures DBMF and Min Volatility USMV crossed above their ratio moving average versus S&P 500 SPY despite negative 20-day returns, while Preferred Stock PFF and Corporate Credit VCIT crossed below their ratio moving average versus Aggregate Bonds AGG. The bond split still favors short-duration and inflation-linked exposure.

FEATURED ETF — iShares MSCI Taiwan ETF EWT

Other Technical Signal Events

EQUITY

↗ Price breakouts (cross-up 20D MA)

None on the close

↘ Price breakdowns (cross-down 20D MA)

• EWT - iShares MSCI Taiwan ETF · 20D perf: +7.54%

• EEM - iShares MSCI Emerging Markets ETF · +3.23%

• VEA - Vanguard FTSE Developed Markets · +1.73%

• IMTM - iShares MSCI Intl Momentum Factor ETF · +0.72%

• DIA - SPDR Dow Jones Industrial Average ETF · +0.59%

• EFA - iShares MSCI EAFE ETF · +0.29%

• EWG - iShares MSCI Germany ETF · unch.

• RSP - Invesco S&P 500® Equal Weight ETF · -0.46%

• VGK - Vanguard FTSE Europe · -0.56%

• XLC - Communication Services Select Sector · -1.12%

• XLF - Financial Select Sector · -2.29%

↗ Leadership gains (cross-up 20D MA vs SPY)

• XLV - Health Care Select Sector · 20D relative perf: -3.12%

• ACWV - iShares MSCI Global Min Vol Factor ETF · -2.96%

• SCHD - Schwab U.S. Dividend Equity ETF · -0.57%

↘ Leadership losses (cross-down 20D MA vs SPY)

None on the close

FIXED INCOME

↗ Price breakouts (cross-up 20D MA)

None on the close

↘ Price breakdowns (cross-down 20D MA)

• VTIP - Vanguard Short-Term Inflation-Protected Securities · 20D perf: +0.32%

↗ Leadership gains (cross-up 20D MA vs AGG)

None on the close

↘ Leadership losses (cross-down 20D MA vs AGG)

• PFF - iShares Preferred and Income Securities ETF · 20D relative perf: +1.12%

• VCIT - Vanguard Intermediate-Term Corporate Bond · -0.11%

SPECIALTY

↗ Price breakouts (cross-up 20D MA)

None on the close

↘ Price breakdowns (cross-down 20D MA)

None on the close

↗ Leadership gains (cross-up 20D MA vs SPY)

• USMV - iShares MSCI USA Min Vol Factor ETF · 20D relative perf: -2.31%

• DBMF - iMGP DBi Managed Futures Strategy ETF · -0.91%

↘ Leadership losses (cross-down 20D MA vs SPY)

• ICLN - iShares Global Clean Energy ETF · 20D relative perf: +3.82%

COMMODITIES

↗ Price breakouts (cross-up 20D MA)

None on the close

↘ Price breakdowns (cross-down 20D MA)

• CPER - United States Copper LP · 20D perf: +2.93%

↗ Leadership gains (cross-up 20D MA vs SPY)

None on the close

↘ Leadership losses (cross-down 20D MA vs SPY)

• CPER - United States Copper LP · 20D relative perf: -1.23%

Romain Gandon
CEO, Quantlake

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results.