35 ETFs to Watch After the S&P 500's Most Recent Surge

Over the last 100 trading days, or roughly five months, the S&P 500 Index (SPX) has surged more than 25%. The table below shows the last few times we’ve seen a move like this and how the index performed afterward. In the short term, the results were mixed, but over the next year, the index showed double-digit gains all three times with an average of about 19%. My focus in this article, however, will be looking at how sectors performed going forward based on whether they led or lagged during the rally. This may help determine which sectors present the best opportunities right now.   

Outperforming Sectors vs. Underperforming Sectors 

I have a list of 35 exchange-traded funds (ETFs) that I follow, including mostly sector-specific ETFs but also a few broad-market ETFs, like the SPDR S&P 500 ETF Trust (SPY) and iShares Russell 2000 ETF (IWM). Looking at those last few 100-day rallies, I separated the ETFs into whether they outperformed the SPX, underperformed it while still positive, or were negative during the rally. 

I wanted to test whether it made more sense to ride the momentum in the strongest sectors or whether mean reversion would lead to weaker sectors outperforming going forward. The results over the past few rallies are clear. Sticking with the strongest sectors has been the way to go. The ETFs on my list that outperformed the SPX during the 100-day rally averaged a gain of 5.49% over the next month, with 73% positive and 54% of the ETFs beating the SPX. The ETFs that were positive during the rally but underperformed the SPX gained 0.64% on average over the next month, with just 42% of them beating the SPX. There were only seven data points of ETFs negative during the strong rally, so it’s hard to draw a conclusion from those numbers, but they performed well over the next month.

The second table below shows the three-month returns of the ETFs, and the trend is even clearer. The outperformers during the rally averaged an impressive 10.94% over the next three months, with 61% beating the SPX. Those ETFs that were positive but by less than the SPX during the rally averaged a return of 2.44% and only 30% of them beat the SPX. 

35 ETFs to Consider

Below, I have my list of 35 ETFs that I keep an eye on, along with their return over the last 100 trading days. Based on the data above, the ETFs in the green part of the table, or all those above the SPY, are better bets over the next few months than the ones below the SPY. 

Metals, gold miners, and silver are in the bullish section of the table, but not gold. Semiconductors and technology stocks have been stronger than the broad market as well over the past 100 trading days.