Summary
- The Monthly ETF Signal Portfolio is outperforming the S&P 500 by over 23% YTD, leveraging sector momentum and market timing models.
- Energy sector bull funds like ERX and XLE have delivered the strongest gains, mirroring 2022 dynamics but for different reasons.
- Financial and technology sectors are under negative momentum signals, with bear funds capturing significant downside moves while private credit warnings abound.
- Market recovery hinges on a positive signal in both S&P 500 and technology sector gauges, while ongoing sector rotations create frequent trading opportunities.
- The ETF model tested last year on Seeking Alpha using 6 sectors delivered +33.57% returns, nearly double the S&P 500 in 2025.
Introduction
The riskiest thing in the world is the belief that there’s no risk. By the same token, the safest (and most rewarding) time to buy usually comes when everyone is convinced there’s no hope.”― Howard Marks, Mastering The Market Cycle: Getting the Odds on Your Side
Timing matters, and it matters greatly. I have spent the last 35 years trading, researching, and constructing algorithms to identify and leverage the value across fundamental, technical, and behavioral finance models. Of the ten portfolio models designed for optimal portfolio mixes for members to beat the market at Value & Momentum Breakouts, eight come from enhancing well-tested anomaly research in published financial journals. All of the models continue to outperform the S&P 500 in live forward testing here on Seeking Alpha, and again this year.
Echoes Of 2022: Bear Bounces As ETF Signal Portfolio Leads S&P 500 By Over 23%
As I shared since last year and last month in my caution articles about the coming rotation to value and major weakness in the mega cap giants, I also am under no illusion that 2026 is identical to 2022. However, I believe we can continue to profit with anticipation of many strong similarities but for very different reasons.
- If This Is A 2022 Market Repeat, Here Is What Likely Happens Next
- Mega Cap 8 Declining As Top Performers Emerge In Major Value Rotation
- First Negative S&P 500 Signals As Mega Tech Breaks Down From October Highs
The Fibonacci retracement levels show strong similarities to 2022 as the S&P 500 approached the first -23.6% retracement level around 6,515 this past week. Similarly, investors are eager for an aggressive bounce soon and a potential short squeeze on the bears who may be getting too bearish.
