These 3 ETFs Might Be Buy-the-Dip Candidates — But There's More to the Story

These 3 ETFs Might Be Buy-the-Dip Candidates — But There’s More to the Story

In a world of instant communication, not to mention instant gratification, for investors, I do not believe much is the same as it used to be. And while I do not know if there’s any such thing as a “dirty little secret” in the year 2026, I am gradually finding evidence that the exchange-traded fund (ETF) industry may have one.

I’m talking about the idea that while there are more than 4,000 U.S. ETFs, a large and increasing number of them move in sync. And the blame does not rest at the feet of product makers. It is the modern market environment. Yet, I do not think the era of trading dominated by passive index inflows and algorithmic trading has fully processed this yet.

That’s a bigger story for another day, as I think the best way to talk about this in a timely way is to show an example. Every week, I go looking for potential turnaround candidates within a list of 75 ETFs, which serve as my primary hunting ground. They are wide-ranging.

But even with that diverse group, more and more, they are a case of beta, not alpha. In other words, they move in sync, just at different speeds. Here’s a trio to show you what I mean.

As I scoured the list this week, I identified potential bounce candidates. I’m still not convinced this market is done to the downside. But I appreciate a counter-trend trade as much as the next guy.

The first ETF that caught my eye was the S&P 500 Materials Sector SPDR (XLB). It is the 10th-largest sector ETF by market capitalization in the S&P 500. There are only 11 of them. XLB just climbed out of the basement, thanks to a powerful gold and silver rally that pushed up prices of the mining stocks it owns. The S&P 500 Real Estate Sector SPDR (XLRE), the real estate investment trust (REIT) sector, now sits in last place, as the smallest sector weight.

That’s an encouraging chart for XLB, which is hard to find lately. Those PPO and 20-day EMA crossovers are something to watch.

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The Vaneck Steel ETF (SLX) is next. Steel looks like a potential mover for the same reasons technically as with XLB. This is its first PPO crossover to the upside in nearly 12 months.

Story Continues

The third and final ETF of this set is the VanEck Gold Miners ETF (GDX). Not quite as far along as the others, but getting there.

So, three optimistic charts following a market decline that essentially took 10% off the stock market averages, and much more off of many stocks and industries.

But here’s the catch: these charts all look pretty good. But they all look similar. Very similar. And that’s my issue with the equity market in 2026. Too much redundancy.

There’s a fundamental case for these. I just do not know if I need to treat all three as separate trades. They are all part of a much larger trade. And while that can simplify investing, I’m guessing many self-directed types, and even professionals, are still playing in a world where ETFs are like snowflakes. They are not all different. Not anymore!

The simultaneous rally in XLB (materials), SLX (steel), and GDX (gold miners) isn’t just a technical bounce; it is a fundamental bet on a new era of physical scarcity and massive industrial retooling. But do I need all of them, or is the one that collects them together — XLB — the singular choice?

That’s a decision for each investor to make. All I’m saying is that investing success is increasingly defined by assessing the primary trend, not via “diversification” that feels good, but is not effective.

To me, THAT is the story here. And I suspect I’ll find a lot more like this. Investors and traders should take note of it.

Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob’s written research, check out ETFYourself.com.

On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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