Banks & Materials: Christmas Gifts for Investors
By Liam Boggan, Founder, CEO and Head of Research at Quantmatix

Days before Christmas, investors can cheer that the U.S. stock rally is not only continuing and that the rotation flagged last week into financials and materials is gathering momentum, but our Quantmatix artificial intelligence-powered platform is flagging specific stocks to long and short.

Data-driven analysis from our research platform reveals that banks and materials now enjoy even stronger conviction signals, while energy stocks and the so-called Magnificent Seven tech companies that dominated the bull market in 2025 are losing steam in a dramatic year-end shift.

Financials and Materials Extend Their Lead
Our bullish call on banks is playing out exceptionally well: 96% of bank stocks now show strengthening momentum, well above the sector's typical 66% level, with four stocks moving from weakening to strengthening this week vs. just one going in the other direction. Among insurance stocks, 85% are strengthening vs. a typical 55%—the widest gap of any sector. That strength was evident in the insurance composite rising 2% last week, beating major indexes.

Materials stocks are amid an extraordinary shift: some 89% of materials stocks show strengthening momentum (vs. 65% typically) and an incredible 19 have reversed from weakening to strengthening vs. 2 turning negative—among the largest shifts of the year.

Tech, Energy, and Pharma Lose Ground
The negative side of the stock market is equally dramatic, especially among the Mag 7, which have been so dominant this year. Among tech hardware stocks, just 29% are strengthening vs. 40% usually, with only 2 positive reversals. Interestingly, software recorded 6 positive reversals vs. 4 negative reversals last week, suggesting the sector's momentum is splintering after it broadly helped market gains for most of 2025.

Among energy stocks only 38% are strengthening, vs. 67% typically—a huge reversal. Sixteen stocks turned negative last week vs. only 3 turning positive as oil prices hit 2021 lows. Pharmaceuticals are similarly mixed, like software. Only 41% show strengthening momentum against a typical 74%, with nearly equal reversals (12 negative/11 positive) after major firms reached a deal to slash drug prices for U.S. Medicaid recipients and for those without insurance.

Weekly Stock Picks 
The Quantmatix TEVO (trade expected value outcome) model, which has delivered a 68% back-tested win rate in U.S. equities, highlights specific opportunities amid the sector rotation. The TEVO methodology suggests stocks to both long and sell with an 80-day average trade duration. This week, our top five highest-conviction picks include three financial firms and two defensive plays where business is strong and momentum has turned positive. Our five top shorts are among biotech, semiconductors and energy. 

Five Convictions to Consider
  • Our top insurance pick is Kinsale Capital Group, where momentum just flipped positive buoyed by a $250 million stock buyback program announced Dec. 11: our models suggest 6.01% upside with an 83% probability—our highest conviction call this week. 
  • Litigation finance specialist Burford Capital has strengthened its balance sheet, and momentum indicators show it reversing from oversold levels: our models suggest 7.67% upside with a 76% probability of success.
  • E-commerce giant eBay is winning the re-commerce trend—the resale of secondhand, unique goods, especially popular with sustainability conscious Gen Z and Millennials: our models suggest 7.12% upside with 79% probability.
  • Steady dividends confirm cash flow strength as momentum builds in real estate services firm FirstService Corp: our models target 5.50% upside with 76% probability.
  • Data and insight firm RELX Group Plc. had strong revenue growth through 2025 and is seeing improving momentum: our models suggest 4.66% upside with 77% probability.
Bonus/additional Longs: Momentum is turning positive for these stocks—Korean consumer durables firm Coway (6.63% upside, 71% probability), healthcare services firm Chemed (5.66% upside, 72% probability), and cruise firm Royal Caribbean (5.45% upside, 77% probability).

Four Shorts to Consider
  • Biotech Kymera Therapeutics just closed a $602 million upsized equity offering after positive clinical trials, a setup for a post-announcement selloff of an overextended stock, making this our leading short: our models suggest a 25% drop with 64% probability.
  • Clinical updates drove Revolution Medicines higher but now momentum indicators show the rally dying: our models suggest 11.24% downside with 75% probability. 
  • Shares of chip packager Amkor Technology spiked in October after it unveiled capital spending plans, but a leadership transition and margin pressure have been driving shares lower: our models suggest a further 14.83% decline with 63% probability.
  • Recent option exercises and insider sales of offshore driller Transocean signal this might be a good time to sell: our models suggest 10.19% downside with 74% probability.
Bonus/additional Shorts: Chip maker Applied Materials (10.58% downside, 55% probability) and energy storage firm EnerSys (7.73% downside, 54% probability).

What It Means
When 19 materials stocks turn positive in one week and 16 energy names turn negative, it's not random market noise but evidence of a strong sector rotation, a thesis confirmed by our objective TEVO stock selection model. Investors should favor banks, insurance and materials at the sector level. The gap between winners and losers is widening, not narrowing. Sectors where 85-96% of stocks show strengthening trends still have room to run. Those where momentum has dropped 25-40 percentage points below normal face continued pressure.
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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.
This article represents opinion driven by data and is not intended as investment advice or a recommendation to buy or sell securities. Investors should consult with their financial advisors or brokers before making investment decisions.