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.
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
