Tactical Breadth Holds as ETF Leadership Narrows

SUMMARY

At Wednesday's close, we still see strong price participation across our ETF universe, but leadership narrowed sharply into a benchmark-led regime. In equity, 60 of 62 ETFs (97%, unchanged on the day) held above their 20-day moving average, yet only 18 of 61 (30%, -21.3pp on the day) outperformed on a relative basis, leaving a +67pp abs/rel gap as US growth, momentum, semis and select EM carried the bucket while developed ex-US, low-volatility, value, dividend and biotech exposures lost relative ground. Fixed income shows the same shape: 17 of 17 ETFs (100%, unchanged on the day) stayed above their 20-day moving average, but relative breadth slipped to 8 of 16 (50%, -6.2pp), a +50pp gap, with credit and EM debt leading while Treasuries and long duration lagged AGG.

Alternatives improved in price terms, with 12 of 13 ETFs (92%, +7.7pp on the day) above their 20-day moving average, but relative breadth held at just 4 of 13 (31%, unchanged), leaving a +62pp gap and a bucket still carried by a narrow CPER, ETHA, IBIT and SLV pocket while DBA, DBMF, GLD, PDBC and listed real estate fail to confirm; Broad Commodities PDBC did cross above its 20-day moving average. That leaves us with broad price support but limited confirmation across our universe, and with no names sitting near moving averages, the weakening is coming from relative sponsorship rather than indecision at key levels.

20-Day Tactical Breadth

KEY TAKEAWAYS

- We still see the multi-timescale equity leadership list skewed toward global equity (COPX, ICLN), emerging markets (EEM, VWO), Taiwan EWT, South Korea EWY, Brazil EWZ, momentum (IMTM, MTUM), US equity (IWM, IYW, QQQ, SPYG), US/Global equity SMH and Technology sector XLK. On the other side, low-volatility, dividend and quality/value exposures, Germany and China/India, plus equal-weight, financials, staples and healthcare are the sleeves participating in price but not confirming on relative strength.

- Small-Cap Core IJR, Biotechnology IBB and Infrastructure PAVE all saw their ratios versus SPY cross below their 20-day moving average despite still-positive 20-day relative returns of +2.1%, +0.6% and +1.6%. We read those as fading leadership, whereas Germany EWG crossed down with a -0.6% 20-day relative return, which puts that part of developed ex-US in clearer deterioration.

- In fixed income, we are seeing credit beat duration across daily, weekly and monthly views: EM debt, high-yield credit, investment grade, mortgage-backed securities, preferreds and inflation-linked bonds remain the persistent relative leaders, while Long Treasuries TLT and the government-duration complex lag AGG. In alternatives, PDBC's price cross adds to the absolute recovery, but DBA, DBMF, GLD, PDBC and listed real estate still sit in the divergent camp — above their 20-day moving average, yet not leading on a relative basis.

FEATURED ETF — Highest 20-Day Relative Momentum Gain: IJR vs SPY

OTHER TECHNICAL SIGNAL EVENTS

──── EQUITY ──────

⇄ Relative Strength Signals (vs SPY)

Below 20D moving average:

   iShares Core S&P Small-Cap ETF IJR (20D relative perf: +2.08%)

   Global X U.S. Infrastructure Development ETF PAVE (+1.57%)

   Vanguard FTSE Europe VGK (+0.75%)

   iShares Biotechnology ETF IBB (+0.62%)

   Vanguard FTSE Developed Markets VEA (+0.55%)

   iShares Edge MSCI Intl Value Factor ETF IVLU (+0.53%)

   iShares MSCI USA Value Factor ETF VLUE (+0.42%)

   iShares MSCI EAFE ETF EFA (+0.37%)

   iShares MSCI Intl Quality Factor ETF IQLT (+0.29%)

   Vanguard Total World Stock VT (+0.25%)

   iShares MSCI World ETF URTH (+0.15%)

   Vanguard Total Stock Market VTI (+0.13%)

   iShares MSCI Germany ETF EWG (-0.63%)

──── FIXED INCOME ──────

⇄ Relative Strength Signals (vs AGG)

Below 20D moving average:

   iShares 20+ Year Treasury Bond ETF TLT (20D relative perf: -0.47%)

──── ALTERNATIVES ──────

▲ Absolute Price Signals

Above 20D moving average:

   Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF PDBC (20D perf: +0.35%)

‍

Romain Gandon

CEO, Quantlake

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