Jingle All the Way to 2026 as US Banks & Materials Ring in Momentum Shifts
By Liam Boggan, Founder, CEO and Head of Research at Quantmatix
Institutional investors are rotating away from tech stocks and moving into banks, financials, and materials. The latest weekly from Quantmatix Research reveal financials remain strong, materials and consumer sectors are accelerating, while energy and utilities are flashing warning signs.
Materials and Banks Lead the Rotation
Basic materials have outperformed all sectors, gaining 39.6% year-to-date, with technical momentum strengthening significantly since December 26. Among S&P Metals and Mining (XME) holdings, 88% are strengthening, while Materials Select Sector Fund (XLB) shows 92% strengthening.
Financials are experiencing similar strength. The S&P Bank ETF (KBE) has 94% of holdings in strengthening momentum since December 5, with 82% in a positive regime (up from 66% last week). The S&P Regional Banking ETF (KRE) shows comparable momentum, yielding 19.2% year-to-date—outpacing the S&P 500.
The S&P Transportation ETF (XTN) is also showing robust momentum, with 87% of stocks strengthening. The simultaneous acceleration in materials and transportation suggests optimism about increased economic activity, not just commodity price speculation.
Early Opportunities in Communications and Capital Markets
Communication services and capital markets show early bullish signals. While 80% of Communication Services (XLC) stocks are strengthening, only 42% are in positive regime—often a sign of momentum building before broader recognition. Similarly, S&P Capital Markets ETF (KCE) has 82% strengthening but only 41% positive regime, presenting opportunities for those seeking early inflection points.
Energy, Utilities, Real Estate: Caution Flags
Energy is underperforming with the sector up just 5.1% year-to-date. The Energy Select Sector Fund (XLE) shows 65% of stocks weakening—a bear-plunge setup. Utilities mirror this decline, with 86% of Utilities Select Sector Fund (XLU) stocks weakening. Real estate and homebuilders also show negative trends.
What Investors Should Consider
The Quantmatix TEVO model (68% back-tested win rate) highlights KBE, XLB, KRE, and S&P Insurance ETF (KIE) as sectors with mature positive momentum. XLC and KCE offer early-stage bullish setups for those comfortable with volatility.
The broad market rotation that began in late November appears to be in its early stages, indicating further opportunities for data-driven investors.
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Liam Boggan is founder, CEO and Head of Research at Quantmatix. The analysis presented here is based exclusively on objective, data-driven momentum analysis from the Quantmatix research platform covering global equity markets.