Friday Close Shows Ex-U.S. and Defensive Rotation

SUMMARY

At Friday's close, leadership within our ETF universe rotated away from U.S.-centric risk and toward ex-U.S. equities, defensives, and higher-quality rate-sensitive pockets. The clearest relative strength improvement came from developed international, emerging markets, China, real estate, and consumer staples versus SPY, though in most cases the 20-day return profile still points to stabilization rather than established leadership. Offsetting that, consumer discretionary lost relative ground, while high yield credit, TIPS, and bitcoin also slipped on a relative basis after prior strength. The broad message is a short-horizon shift in leadership rather than a fully formed risk-on or risk-off regime change, with conviction capped by the fact that most upside ratio moves are emerging from negative trailing relative performance.

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KEY TAKEAWAYS

- Ex-U.S. equity ETFs drove the upside rotation, with developed markets, emerging markets, and China improving versus SPY.

- Defensive and rate-sensitive equity groups also firmed relatively, led by staples and REIT exposure within our ETF coverage.

- Confirmation is incomplete: most relative breakouts reflect early repair, while prior leaders in discretionary, crypto, and high yield are fading.

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BOTTOM LINE

We would read Friday's tape as an early broadening away from U.S. leadership and toward more defensive or non-U.S. exposure. Even so, the 20-day return backdrop argues for measured conviction until more of these relative gains turn from stabilization into sustained outperformance.

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TECHNICAL SIGNAL EVENTS

ABSOLUTE PRICE SIGNALS

None

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RELATIVE STRENGTH SIGNALS

‍Above 20D moving average:

EEM / SPY - iShares MSCI Emerging Markets ETF

Ratio: 0.0871 | 20D Relative Return: -4.83%

EFA / SPY - iShares MSCI EAFE ETF

Ratio: 0.1479 | 20D Relative Return: -3.97%

FXI / SPY - iShares China Large-Cap ETF

Ratio: 0.0550 | 20D Relative Return: +0.86%

IMTM / SPY - iShares MSCI Intl Momentum Factor ETF

Ratio: 0.0732 | 20D Relative Return: -4.96%

IQLT / SPY - iShares MSCI Intl Quality Factor ETF

Ratio: 0.0704 | 20D Relative Return: -3.01%

MBB / AGG - iShares MBS ETF

Ratio: 0.9551 | 20D Relative Return: -0.03%

MCHI / SPY - iShares MSCI China ETF

Ratio: 0.0865 | 20D Relative Return: +0.14%

VEA / SPY - Vanguard FTSE Developed Markets

Ratio: 0.0979 | 20D Relative Return: -4.53%

VGK / SPY - Vanguard FTSE Europe

Ratio: 0.1253 | 20D Relative Return: -4.49%

VNQ / SPY - Vanguard Real Estate ETF

Ratio: 0.1372 | 20D Relative Return: -0.86%

VT / SPY - Vanguard Total World Stock

Ratio: 0.2123 | 20D Relative Return: -1.53%

VWO / SPY - Vanguard FTSE Emerging Markets

Ratio: 0.0828 | 20D Relative Return: -2.53%

XLP / SPY - Consumer Staples Select Sector

Ratio: 0.1290 | 20D Relative Return: -1.42%

XLRE / SPY - SPDR Real Estate Select ETF

Ratio: 0.0631 | 20D Relative Return: -0.87%

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Below 20D moving average:

HYG / AGG - iShares iBoxx $ High Yield Corporate Bond ETF

Ratio: 0.7989 | 20D Relative Return: +0.53%

IBIT / SPY - iShares Bitcoin

Ratio: 0.0590 | 20D Relative Return: +8.50%

JNK / AGG - SPDR® Bloomberg High Yield Bond ETF

Ratio: 0.9606 | 20D Relative Return: +0.39%

TIP / AGG - iShares TIPS Bond ETF

Ratio: 1.1129 | 20D Relative Return: +0.56%

XLY / SPY - Consumer Discretionary Select Sector

Ratio: 0.1667 | 20D Relative Return: -2.24%

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