Tactical Trends: Equity Pullback Favors Defensive Relative Leadership

Price damage widened faster than relative leadership eroded

As of June 24, 22 of 59 equity ETFs (37%, -1.7pp) sit above their 20-day moving average (20D MA), while 42 of 58 (72%, -1.7pp) hold above their 20-day ratio moving average vs S&P 500 SPY (20D ratio MA vs SPY). The 35pp price-relative gap centers leadership in low-volatility, value, quality, US small caps, Taiwan, and India even as developed ex-US, China, Brazil, and Japan sit below their 20D MA. The equity regime is defensive rotation because benchmark outperformance outlasted the price breakdown.

Fixed income posted a price rebound concentrated in rates. 14 of 17 bond ETFs (82%, +11.8pp) stand above their 20D MA, but leadership vs Aggregate Bonds AGG narrows to Treasuries, long duration, international aggregate, and select investment grade as high yield, EM debt, mortgages, munis, and short duration lagged. The bond move is a price recovery with rate-sensitive leadership rather than a broad credit advance.

Specialty holds 6 of 15 ETFs above their 20D MA, and relative leadership vs S&P 500 SPY fell 6.7pp and concentrates in biotech, infrastructure, real estate, and semiconductors while gold, bitcoin-linked funds, and managed futures lagged. Commodities added separate weakness in copper, broad commodities, and silver. The specialty and commodity mix favors equity-linked participation over hedge and metals exposure.

20-Day Tactical Breadth

Key Takeaways

Brazil EWZ crossed below its 20D ratio MA versus S&P 500 SPY after a -4.38% period relative return versus SPY. EWZ also sits in the daily, weekly, and monthly relative laggard cluster alongside Brazil, China, and Germany exposures. The cross-timescale laggard list concentrates in non-US beta exposure.

3-7yr Treasuries IEI and Int. Treasuries VGIT crossed above their 20D MA, yet 7-10yr Treasuries IEF was the only Treasury fund that crossed above its 20D ratio MA versus Aggregate Bonds AGG. High Yield Bonds JNK, EM Sovereign Bonds EMB, Mortgage-Backed MBB, and Muni Bonds MUB crossed below their 20D ratio MA versus AGG. The bond distribution favors rate sensitivity over credit risk.

Managed Futures DBMF crossed below its 20D ratio MA versus S&P 500 SPY, and gold, bitcoin-linked funds, copper, broad commodities, and silver occupy the laggard side of specialty and commodities. Biotech, infrastructure, real estate, and semiconductors align as daily, weekly, and monthly specialty leaders. The specialty complex rewards equity-linked exposure and penalizes macro hedge exposure.

FEATURED ETF: iShares MSCI Brazil ETF EWZ vs SPY

Other Technical Signal Events

EQUITY

↗ Price breakouts (cross-up 20D MA)

XLB - Materials Select Sector · 20D perf: +0.71%

↘ Price breakdowns (cross-down 20D MA)

EWJ - iShares MSCI Japan ETF · 20D perf: +0.23%

IMTM - iShares MSCI Intl Momentum Factor ETF · -1.10%

↗ Leadership gains (cross-up 20D MA vs SPY)

EFAV - iShares MSCI EAFE Min Vol Factor ETF · 20D relative perf: -0.67%

↘ Leadership losses (cross-down 20D MA vs SPY)

SCHD - Schwab U.S. Dividend Equity ETF · 20D relative perf: -0.87%

EWZ - iShares MSCI Brazil ETF · -4.38%

FIXED INCOME

↗ Price breakouts (cross-up 20D MA)

IEI - iShares 3-7 Year Treasury Bond ETF · 20D perf: +0.34%

VGIT - Vanguard Intermediate-Term Treasury Index ETF · +0.45%

↘ Price breakdowns (cross-down 20D MA)

None on the close

↗ Leadership gains (cross-up 20D MA vs AGG)

IEF - iShares 7-10 Year Treasury Bond ETF · 20D relative perf: unch.

↘ Leadership losses (cross-down 20D MA vs AGG)

EMB - iShares J.P. Morgan USD Emerging Markets Bond ETF · 20D relative perf: +0.58%

MUB - iShares National Muni Bond ETF · +0.21%

MBB - iShares MBS ETF · unch.

JNK - SPDR Bloomberg High Yield Bond ETF · -0.33%

SPECIALTY

↗ Price breakouts (cross-up 20D MA)

None on the close

↘ Price breakdowns (cross-down 20D MA)

None on the close

↗ Leadership gains (cross-up 20D MA vs SPY)

None on the close

↘ Leadership losses (cross-down 20D MA vs SPY)

DBMF - iMGP DBi Managed Futures Strategy ETF · 20D relative perf: -0.29%

COMMODITIES

No event on the close

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.