Defensives Rally as South Korea Slides, Oil Jumps

Defensive equity leadership stood out Thursday, with Utilities (XLU) rising 2.72% and Infrastructure (PAVE) up 2.21%, while South Korea (EWY) and Copper Miners (COPX) led the downside. In fixed income, inflation-linked exposure edged higher as TIP and VTIP outperformed, while EM sovereign debt (EMB) and investment-grade credit (LQD) weakened. Alternatives were led by a sharp gain in Oil (USO), with Broad Commodities (PDBC) also firmer, as Ethereum (ETHA) and Silver (SLV) fell back.

South Korea tanked 3.34%

Equity ETFs

Leaders: Utilities XLU +2.72% (3M perf: +8.7%), Infrastructure PAVE +2.21% (+9.1%)
Laggards: South Korea EWY -3.34% (3M perf: +29.8%), Copper Miners COPX -2.87% (+0.3%)

3M Regime

Strong: South Korea EWY (3M perf: +29.8%), Taiwan EWT (+23.4%), Semiconductors SMH (+19.6%)

Weak: Gold Miners GDX (3M perf: -12.3%), China MCHI (-8.8%), China Large Cap FXI (-7.6%)

Signals to Monitor

Volatility Compression: Copper Miners COPX, High Dividend DVY, Brazil EWZ

Overbought: Taiwan EWT, US Technology IYW, Momentum Factor MTUM

EM Sovereign Bonds fell 0.47%

Fixed Income ETFs

Leaders: TIPS TIP +0.16% (3M perf: +1.4%), Short TIPS VTIP +0.14% (+1.6%)
Laggards: EM Sovereign Bonds EMB -0.47% (3M perf: +0.8%), Inv. Grade Credit LQD -0.27% (unch.)

3M Regime

Strong: Short TIPS VTIP (3M perf: +1.6%), TIPS TIP (+1.4%), EM Sovereign Bonds EMB (+0.8%)

Weak: Preferred Stock PFF (3M perf: -0.3%), Long Treasuries TLT (-0.2%), Global Bonds BNDX (-0.1%)

Oil surged 4.11%

Alternative ETFs

Leaders: Oil USO +4.11% (3M perf: +87.6%), Broad Commodities PDBC +1.42% (+26.6%)
Laggards: Ethereum Trust ETHA -3.53% (3M perf: -21.1%), Silver SLV -2.83% (-21.5%)

3M Regime

Strong: Oil USO (3M perf: +87.6%), Broad Commodities PDBC (+26.6%), Real Estate Sector XLRE (+7.6%)

Weak: Silver SLV (3M perf: -21.5%), Ethereum Trust ETHA (-21.1%), Bitcoin Trust IBIT (-13.1%)

Signals to Monitor

Volatility Compression: Managed Futures DBMF, Ethereum Trust ETHA, Long/Short Equity FTLS

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.