Intermediate Trend Participation Rebounds Narrowly

SUMMARY

Last week, price repair spread decisively across our ETF universe, but equity internals slipped into a breadth trap rather than a clean broadening move. In equity, 46 of 62 ETFs (74%) held above their 13-week moving average while only 37 of 61 (61%) stayed above their relative 13-week moving averages, and South Korea EWY is our chart anchor because its reclaim came with a 27.4% 13-week return, capturing the stronger Asia-led pocket of the move. Fixed income improved from a mixed base, with 8 of 17 ETFs (47%) above their 13-week moving average and 8 of 16 (50%) above their relative 13-week moving averages, where credit is improving more clearly than government duration. Alternatives also stayed mixed but firmer, with 9 of 13 ETFs (69%) above their 13-week moving average and 8 of 13 (62%) above their relative 13-week moving averages, led more by real estate and copper than by diversifiers; that keeps us constructive on the recovery in prices, but less convinced by the quality of equity leadership.

13-Week Intermediate Trend Breadth

KEY TAKEAWAYS

- Across the clearest equity leadership cluster, Copper Miners COPX, Emg. Markets EEM, Dev. Markets EFA and Japan EWJ are holding above their 20-day, 13-week and 10-month moving averages and are also in relative leadership, keeping the rotation centered on international equity and copper/miners. China equity remains on the weak side of that relative map.

- Nasdaq 100 QQQ and US Technology IYW did reclaim their relative 13-week moving averages, but negative 13-week ratio returns tell us we are looking at early repair in tech leadership rather than established outperformance. Equal Weight S&P 500 RSP, Dividend Quality SCHD and Global Min Vol ACWV slipping below their relative 13-week moving averages marks fading leadership rather than entrenched weakness, yet it still leaves domestic participation narrow.

- EM Sovereign Bonds EMB, High Yield HYG, High Yield Bonds JNK, Mortgage-Backed MBB and Corp. Credit VCIT define the improving fixed-income cluster, while government and long-duration Treasuries remain on the weak side of relative leadership. In alternatives, Real Estate VNQ and Global REITs REET pair price strength with relative leadership, Copper CPER is strengthening versus SPY, and Managed Futures DBMF is giving back prior leadership rather than breaking down outright.

BOTTOM LINE

We will upgrade conviction if Equal Weight S&P 500 RSP and the broader U.S. size and value cohort reclaim relative leadership versus SPY while South Korea EWY and the current international leaders keep holding above their 13-week moving averages. We would turn more cautious if South Korea EWY, Emg. Markets EEM and Copper Miners COPX fall back below their 13-week moving averages, because the recovery would lose the cluster doing most of the work.

FEATURED ALERT (EWY)

OTHER TECHNICAL SIGNAL EVENTS

──── EQUITY ──────

▲ Absolute Price Signals

Above 13W moving average:

   iShares U.S. Technology ETF IYW (13W perf: -3.7%)

   SPDR® Portfolio S&P 500 Growth ETF SPYG (-3.1%)

   Invesco QQQ QQQ (-2.4%)

   Technology Select Sector XLK (-2.3%)

   iShares MSCI USA Quality Factor ETF QUAL (-2.0%)

   Vanguard Total Stock Market VTI (-1.8%)

   Vanguard Dividend Appreciation VIG (-1.1%)

   iShares MSCI World ETF URTH (-0.6%)

   SPDR® Portfolio S&P 500 Value ETF SPYV (-0.5%)

   Vanguard Mid-Cap VO (-0.3%)

   JPMorgan Nasdaq Equity Premium Income ETF JEPQ (unch.)

   Vanguard Small-Cap VB (+0.5%)

   Vanguard Total World Stock VT (+0.5%)

   iShares Russell 2000 ETF IWM (+0.6%)

   JPMorgan Equity Premium Income ETF JEPI (+0.7%)

   Vanguard FTSE Europe VGK (+2.0%)

   Vanguard FTSE Emerging Markets VWO (+2.4%)

   iShares MSCI USA Momentum Factor ETF MTUM (+2.6%)

   iShares Core S&P Small-Cap ETF IJR (+3.1%)

   iShares MSCI EAFE ETF EFA (+3.4%)

   iShares MSCI Intl Quality Factor ETF IQLT (+3.6%)

   Vanguard High Dividend Yield VYM (+3.9%)

   iShares MSCI Intl Momentum Factor ETF IMTM (+3.9%)

   iShares MSCI Japan ETF EWJ (+4.2%)

   Vanguard FTSE Developed Markets VEA (+5.2%)

   iShares MSCI USA Value Factor ETF VLUE (+5.9%)

   iShares MSCI Emerging Markets ETF EEM (+6.0%)

   Industrial Select Sector XLI (+6.2%)

   iShares Edge MSCI Intl Value Factor ETF IVLU (+6.5%)

   VanEck Gold Miners ETF GDX (+7.4%)

   Global X Copper Miners ETF COPX (+7.7%)

   Global X U.S. Infrastructure Development ETF PAVE (+9.0%)

   iShares Global Clean Energy ETF ICLN (+9.2%)

   VanEck Semiconductor ETF SMH (+12.2%)

   iShares MSCI South Korea ETF EWY (+27.4%)

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⇄ Relative Strength Signals (vs SPY)

Above 13W moving average:

   iShares U.S. Technology ETF IYW (13W relative perf: -1.9%)

   SPDR® Portfolio S&P 500 Growth ETF SPYG (-1.3%)

   Invesco QQQ QQQ (-0.5%)

   Vanguard FTSE Emerging Markets VWO (+4.3%)

   iShares MSCI Emerging Markets ETF EEM (+8.0%)

   VanEck Gold Miners ETF GDX (+9.4%)

   Global X Copper Miners ETF COPX (+9.7%)

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Below 13W moving average:

   Schwab U.S. Dividend Equity ETF SCHD (13W relative perf: +10.0%)

   iShares Select Dividend ETF DVY (+7.5%)

   Consumer Staples Select Sector XLP (+6.5%)

   SPDR® S&P Dividend ETF SDY (+5.2%)

   JPMorgan Equity Premium Income ETF JEPI (+2.6%)

   iShares MSCI Global Min Vol Factor ETF ACWV (+2.3%)

   Invesco S&P 500® Equal Weight ETF RSP (+1.8%)

   Vanguard Mid-Cap VO (+1.6%)

   SPDR® Portfolio S&P 500 Value ETF SPYV (+1.4%)

   Vanguard Dividend Appreciation VIG (+0.8%)

   iShares MSCI USA Min Vol Factor ETF USMV (+0.2%)

   iShares Biotechnology ETF IBB (+0.2%)

   Vanguard Total Stock Market VTI (unch.)

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──── FIXED INCOME ──────

▲ Absolute Price Signals

Above 13W moving average:

   Vanguard Intermediate-Term Corporate Bond VCIT (13W perf: unch.)

   SPDR® Bloomberg High Yield Bond ETF JNK (+0.2%)

   iShares MBS ETF MBB (+0.2%)

   iShares iBoxx $ High Yield Corporate Bond ETF HYG (+0.2%)

   Vanguard Short-Term Corporate Bond VCSH (+0.4%)

   iShares J.P. Morgan USD Emerging Markets Bond ETF EMB (+0.4%)

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⇄ Relative Strength Signals (vs AGG)

Above 13W moving average:

   Vanguard Intermediate-Term Corporate Bond VCIT (13W relative perf: -0.1%)

   iShares J.P. Morgan USD Emerging Markets Bond ETF EMB (+0.3%)

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──── ALTERNATIVES ──────

▲ Absolute Price Signals

Above 13W moving average:

   United States Copper LP CPER (13W perf: -0.8%)

   First Trust Long/Short Equity ETF FTLS (+1.3%)

   iShares Global REIT ETF REET (+4.9%)

   Vanguard Real Estate ETF VNQ (+5.0%)

   SPDR Real Estate Select ETF XLRE (+6.4%)

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⇄ Relative Strength Signals (vs SPY)

Above 13W moving average:

   United States Copper LP CPER (13W relative perf: +1.1%)

Below 13W moving average:

   iMGP DBi Managed Futures Strategy ETF DBMF (13W relative perf: +8.8%)

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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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