🎄Jingle All the Way to 2026 — U.S. Banks & Materials Lead the Rotation
Our Dec 22 Quantmatix insight flagged a meaningful shift in U.S. equity leadership. One week on, the data confirms it: capital is rotating away from over-extended Tech and decisively into Banks, Financials, Materials, and cyclically sensitive sectors.
This is not a seasonal effect. Momentum breadth and regime strength continue to expand, validating a durable rotation beneath the index surface.
🧭 Sector Momentum Check (Quantmatix Data)
🧱 Materials — Clear Leadership
Basic Materials: +39.6% YTD, strongest sector performance
XLB: 92% of constituents strengthening
Metals & Mining (XME): 88% strengthening
📌 Acceleration since Dec 26 confirms institutional accumulation.
🏦 Financials & Banks — Regime Strength
KBE (Banks): 94% strengthening; 82% now in positive regime (up from 66% last week)
KRE (Regional Banks): +19.2% YTD, outperforming the S&P 500
📌 Breadth expansion + regime confirmation = sustained trend strength.
🚚 Transports — Economic Confirmation
XTN: 87% of stocks strengthening
📌 Materials and Transports accelerating together signals confidence in real economic activity, not commodity speculation.
🌱 Early-Stage Inflections (Pre-Consensus)
📡 Communication Services (XLC)
80% strengthening
Only 42% in positive regime
📌 Momentum building ahead of broad recognition.
🏛️ Capital Markets (KCE)
82% strengthening
41% positive regime
📌 Early-cycle setup with improving breadth.
⚠️ Caution Zones
⛽ Energy
+5.1% YTD
XLE: 65% of stocks weakening
📌 Bear-plunge characteristics emerging.
⚡ Utilities
XLU: 86% weakening
📌 Defensive leadership breaking down.
🏘️ Real Estate & Homebuilders
Momentum continues to deteriorate
📌 Opportunity cost rising versus accelerating cyclicals.
🎯 Quantmatix Positioning Framework
Based on proprietary momentum and regime analysis:
✅ Overweight / Strong Momentum: Banks (KBE), Materials (XLB), Regional Banks (KRE), Insurance (KIE)
🌱 Early-Stage Upside: Communication Services (XLC), Capital Markets (KCE)
❌ Underweight / Avoid: Energy, Utilities, Real Estate
🔮 Quantmatix Outlook
The U.S. equity rotation that aligns with our late-November signals remains in its early innings. Broadening participation, improving regime alignment, and cross-sector confirmation suggest continued leadership from Financials and Materials into 2026.
This is a market rewarding data-driven positioning and active rotation, not passive exposure.
Disclaimer:
The trade ideas and commentary shared on this page are provided for educational and informational purposes only. They do not constitute financial advice, investment recommendations, or an offer or solicitation to buy or sell any securities. All content reflects the opinions of the authors and is subject to change without notice. QM Trades does not provide personalized investment advice and is not a registered investment advisor or broker-dealer. Always do your own research and consult with a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results. Trading and investing in financial markets involve risk, including the potential loss of capital.