Tactical Trends: Developed Markets Lead as Defensives Slip Lower

Broad equity participation outruns selective relative leadership.

Developed markets and international quality firmed at the close on August 17 across our ETF universe, with 53 of 59 equity ETFs (90%, -3.4pp) above their 20-day moving average (20D MA) and only 24 of 58 (41%, +1.7pp) above their 20-day ratio moving average vs the S&P 500 SPY (20D ratio MA vs SPY), a 48pp price-relative gap. Developed markets EFA crossed above its 20D ratio MA vs SPY, and consumer staples plus real estate moved into the price laggard cluster. The equity profile resembles a broad price advance led on a relative basis by developed ex-US, Asia-Pacific, and select US growth; low-volatility, China, and domestic yield proxies lag the benchmark.

Only 8 of 17 fixed-income ETFs hold above their 20D MA, and 11 of 16 outperform the Aggregate Bonds AGG on a 20D ratio MA vs AGG basis. High-yield credit, short duration, and intermediate Treasuries define the winners, and investment-grade credit plus long duration fill the laggard cluster. Bond leadership favors stability and selective duration over broad rate-sensitive participation.

Precious metals, biotech, and semiconductors hold the only specialty leadership vs the S&P 500 SPY, while crypto, infrastructure, and defensive specialty names hold above their 20D MA without relative leadership. Commodities add a separate inflation-sensitive pocket: agriculture crossed above its 20D MA, and broad commodities plus oil crossed above their 20D ratio MA vs the S&P 500 SPY. The specialty and commodity mix concentrates strength in metals and inflation-sensitive exposures, while crypto price recovery lacks benchmark-relative confirmation.

20-Day Tactical Breadth

Key Takeaways

Communication Services XLC, down 3.94% relative to SPY over the trailing 20-day window, crossed below its 20-day ratio moving average. The cross-timescale laggard cluster already includes communication services, value-heavy US equity, and defensives, so the relative weak list extends beyond a single sector break.

Intl Quality IQLT and Dev. Markets EFA crossed above their 20-day ratio moving averages versus SPY after 20-day returns of 1.41% and 1.55%. Equity alignment across daily, weekly, and monthly signals is 88%, with developed ex-US, Asia-Pacific, and US growth concentrated in the relative leader group. The leader set skews international and growth-linked.

7-10yr Treasuries IEF crossed below its 20-day moving average and above its 20-day ratio moving average versus AGG on the same close. EM Sovereign Bonds EMB and Muni Bonds MUB share the same pattern, below their 20-day moving averages and above their 20-day ratio moving averages versus AGG. Bond leadership is selective and duration-sensitive.

FEATURED ETF: Communication Services Select Sector XLC vs SPY

Other Technical Signal Events

Equity: Price vs 20-day MA

Signal	Ticker	Name	20D perf
Cross-down	XLP	Consumer Staples Select Sector	-0.21%
Cross-down	XLRE	The Real Estate Select Sector	-0.88%

Equity vs SPY: Price Ratio vs 20-day MA

Signal	Ticker	Name	20D rel perf
Cross-up	IQLT	iShares MSCI Intl Quality Factor ETF	+1.41%
Cross-up	EFA	iShares MSCI EAFE ETF	+1.55%
Cross-down	XLC	Communication Services Select Sector	-3.94%

Fixed Income: Price vs 20-day MA

Signal	Ticker	Name	20D perf
Cross-down	EMB	iShares J.P. Morgan USD Emerging Markets Bond ETF	-0.27%
Cross-down	IEF	iShares 7-10 Year Treasury Bond ETF	-0.41%
Cross-down	VCIT	Vanguard Intermediate-Term Corporate Bond Index ETF	-0.43%
Cross-down	TIP	iShares TIPS Bond ETF	-0.46%
Cross-down	MUB	iShares National Muni Bond ETF	-0.52%

Fixed Income vs AGG: Price Ratio vs 20-day MA

Signal	Ticker	Name	20D rel perf
Cross-up	IEF	iShares 7-10 Year Treasury Bond ETF	unch.

Specialty: Price vs 20-day MA

Signal	Ticker	Name	20D perf
Cross-up	IBIT	iShares Bitcoin	-1.27%
Cross-up	ETHA	iShares Ethereum Trust ETF	+0.49%

Commodities: Price vs 20-day MA

Signal	Ticker	Name	20D perf
Cross-up	DBA	Invesco DB Agriculture	+0.43%

Commodities vs SPY: Price Ratio vs 20-day MA

Signal	Ticker	Name	20D rel perf
Cross-up	USO	United States Oil Fund LP	-0.30%
Cross-up	PDBC	Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF	+0.63%

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.