In a world of instant communication, not to mention instant gratification, for investors, I don’t think much of it will be the same as before. And while I don’t know if there will be such a thing as a “dirty little secret” in the year 2026, I’m slowly finding evidence that the exchange-traded fund (ETF) industry may have one.
I’m referring to the idea that while there are over 4,000 US ETFs, a large and growing number of them move in sync. And the fault is not with the product manufacturers. It is the modern market environment. However, I don’t think the era of trading dominated by passive index entries and algorithmic trading has fully processed this yet.
That’s a more important story for another day, as I think the best way to talk about this in a timely manner is to show an example. Each week, I search for potential turnaround candidates within a list of 75 ETFs, which are my primary hunting ground. They are wide-ranging.
But even with that diverse group, it’s increasingly a beta case, not an alpha. In other words, they move in sync, just at different speeds. Here’s a trio to show you what I mean.
While reviewing the list this week, I identified potential rebound candidates. I’m still not convinced this market is bearish. But I appreciate a counter-trend trade as much as anyone.
The first ETF that caught my attention was the S&P 500 Materials Sector SPDR (XLB). It is the 10th largest sector ETF by market cap in the S&P 500. There are only 11 of them. XLB just came out of the basement thanks to a powerful rally in gold and silver that drove up the prices of the mining stocks it owns. The S&P 500 Real Estate Sector SPDR (XLRE), the real estate investment trust (REIT) sector, now ranks last, as the smallest sector.
This is an encouraging chart for XLB, which is hard to find lately. Those PPO and 20-day EMA crossovers are something to keep an eye on.
The Vaneck Steel ETF (SLX) is next. Steel looks like a potential powerhouse for the same technical reasons as the XLB. This is its first PPO cross to the upside in almost 12 months.
