Over the past three days, I have been diving into the macro themes of the market—long-term trends, commodity price dynamics, and, most recently, the rate environment. As I prepared this note, I shifted focus to the stocks reporting earnings this week. The backdrop was strong: solid earnings outlooks, optimistic guidance, EPS beats on balance, and positive analyst drift over the past three quarters. Under normal circumstances, you would expect confirmation from company reports to reinforce higher prices.

That has not been the case. Momentum across most of these names is weakening.

The story is similar in ETF markets. I track roughly 35 ETFs across sectors, and many show fundamentals that would typically support higher prices. Yet, like the individual stocks reporting this week, approximately 80% of these ETFs are trending lower, failing to follow through on those positive signals. The ETFs that are holding up tend to be concentrated in commodities and lower-volatility strategies, while most other areas continue to point downward. With that in mind, it is worth examining a few key areas where the market may be diverging from the underlying fundamentals.

Silver Not So Shiny?

When I first analyzed the SLV, I was struck by how far it had advanced since last spring without touching its 20-week moving average. One of my momentum frameworks evaluates how price interacts with Bollinger Bands and key ranges. When a stock or ETF fails to retrace to the 20-week average, it often triggers momentum-driven buying—and that dynamic was clearly in play here. SLV climbed nearly 20 price ranges beyond what I would have expected without a meaningful retracement before ultimately collapsing in sharp fashion. This past week, it pivoted higher at a projected support level but remains below the key 20-week average. While the current macro regime supports higher silver prices, the magnitude of the recent decline raises a key question: will buyers step back in, or has the trend been structurally damaged?

Failure to Communicate?

This next ETF also features a supportive regime (and thus expected higher prices) but currently has a lower momentum profile. The XLC, the Communication Services ETF, has plenty of resistance near the 118 to 120 area which has kept a lid on gains. There is not much support however, until the low 100s which argues that a bigger bout of weakness is coming. Due to its volatile nature (mainly the who’s who of technology such as META, GOOGL, and NFLX), one must rely more on trends than ranges with the XLC and given the names in it, perhaps it follows the plan mentioned earlier this week with the broad markets – bounce higher and then eventually into that low support.

A Boom in Farming?

I mentioned in the opening that commodities were doing well and the DBA (Agriculture) is no exception. While its chart does not show the explosive move seen in the SLV or the DBC (commodities), this ETF has quietly climbed above resistance and is moving higher. Yesterday’s note showed the 2-year breakout, which suggests the market is becoming concerned about inflation. Further, I mentioned earlier in the week that gradual increases in crude prices tend to pass through to end prices more effectively than spikes—well, DBA is gradually climbing. As a result, two things stand out: the trade appears to be higher for agriculture, and the inflation story is building. Get your popcorn now?

Going South

For the next chart, this ETF features a very positive fundamental regime. In fact, it is the best of the international ETFs that I follow. Its momentum turn this week is also bullish, as investors have rushed back into the EWW (Mexico ETF). The EWW has had a very similar run to SLV—though not as parabolic—but it remained consistently above the 20-week moving average until its recent pullback. The climb over the past few days suggests that the trend has just resumed to the upside. The macro backdrop also supports further gains.

Looking to Hide

The last ETF to review doesn’t feature the strongest fundamental backdrop (it is largely middle of the road), but when investors look to avoid highly volatile stocks—such as those in the XLC above—they tend to migrate toward ETFs like this one, the EFAV (EAFE Minimum Volatility ETF). EFAV had its own parabolic climb (something I never thought I’d say about a minimum volatility ETF), but when it pulled back from that high, it did not break below the 20-week moving average. In fact, it is finding buyers this week. Given the war and broader uncertainty, this ETF may continue its upward climb. And even if it only rises slowly, you still collect about a 3% dividend yield in the meantime.

The divergence between fundamentals and price…which wins?

The key takeaway across both equities and ETFs is a clear divergence between fundamentals and price action. Strong earnings, supportive macro conditions, and improving analyst sentiment are not translating into sustained upside momentum. Instead, capital is concentrating in a narrow set of areas—commodities and defensive, low-volatility strategies—while most other sectors weaken.

This is not a random disconnect. It suggests that positioning, liquidity, and the appetite for risk (no kidding) is overriding fundamentals in the short term. When that happens, the risk is that fundamentals either need to assert themselves through a delayed catch-up or these same fundamentals deteriorate to price. Right now, the market is leaning toward the latter interpretation. Right now the charts are winning but for how long? Once again, it all depends on what happens in Iran…at least for now!

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