01 Apr 2026 6 min read

Apr-26 Outlook

TrendWell Digest — April 2026 ETF Picks

5 Bullish ETFs to Watch This Month

Heading into April, our quantitative models — built on over 25 years of market data going back to October 2000 — have flagged five ETFs where key predictive indicators are all aligned in a historically favorable direction. When these conditions have converged in the past, the average annualized return across this group has been 14%. The backdrop is notable: the Fed held rates steady at 3.50%–3.75% for a second consecutive meeting in March, maintaining a wait-and-see posture as the conflict in Iran sends oil prices surging and keeps inflation above target. Meanwhile, Treasury yields have climbed to their highest levels since mid-2025, and job creation has slowed markedly — a combination that is showing up directly in the rate-sensitive and volatility-driven indicators behind this month's selections.

IJJ — iShares S&P Mid-Cap 400 Value ETF

IJJ tracks mid-cap U.S. value stocks within the S&P MidCap 400 index, offering exposure to companies that tend to be more domestically focused and sensitive to borrowing conditions.

Flat federal funds rate signals stable borrowing costs: The prior month's percentage change in the federal funds rate (DFF) came in at 0%, meaning the Fed made no adjustment. When the fed funds rate is flat or declining — removing tightening pressure on mid-cap balance sheets — IJJ has historically returned 13% annualized, compared to 7% when rates were rising.
Sharp decline in short-term Treasury yields points to easing ahead: The six-month change in the 1-year Treasury bill rate (DTB1YR) has dropped significantly, falling -215% on a relative basis. A declining 1-year yield suggests the market is pricing in lower future rates, which directly reduces borrowing costs and improves valuations for capital-intensive mid-cap companies. Under these conditions, IJJ has returned 11% annualized, versus 5% when yields were rising.
Moderate mid-cap volatility creates opportunity without panic: The trailing 12-month standard deviation of the S&P MidCap 400 SPDR (MDY) sits at 61% of its long-term historical average. This level of measured — not extreme — volatility allows for healthy price dispersion among value stocks without triggering broad risk-off selling. When MDY volatility has been at this level or higher, IJJ has returned 10% annualized, compared to 6% when volatility was lower.

GLD — SPDR Gold Shares

GLD tracks the price of gold bullion and serves as one of the most liquid vehicles for gaining exposure to the precious metal.

Surging consumer discretionary trading volume signals uncertainty: The six-month change in trading volume for the Consumer Discretionary Select Sector SPDR (XLY) has spiked 79%. When investors are actively repositioning within cyclical consumer sectors at this pace, it typically reflects rising uncertainty about the economic cycle — conditions that historically drive capital toward safe-haven assets like gold. When XLY volume changes have been this elevated or higher, GLD has returned 28% annualized, versus 9% otherwise.
Mild rate-spread volatility reflects a policy inflection point: The six-month standard deviation of the 3-month Treasury vs. federal funds rate spread (T3MFF) registers at just 16% of its historical range. This low but nonzero reading indicates the market sees the Fed in a transitional stance — not aggressively tightening or cutting — which has historically been a fertile environment for gold as investors hedge against the next directional move. When this spread volatility has registered at 16% or above, GLD has returned 23% annualized, compared to 6% when it was flatter.
April has historically been a strong month for gold: The calendar itself is a factor. April ranks among the more favorable months for GLD in the historical dataset. During months in this seasonal grouping, GLD has returned 19% annualized, versus 11% in less favorable calendar periods.

IJT — iShares S&P Small-Cap 600 Growth ETF

IJT tracks small-cap U.S. growth stocks within the S&P SmallCap 600 index, tilted toward faster-growing companies that are sensitive to economic momentum and financing conditions.

Subdued mid-cap value performance sets up a rotation opportunity: The six-month return on the iShares S&P Mid-Cap 400 Value ETF (IJJ) has been just 2%. When mid-cap value stocks have posted modest gains like this over the prior half-year, small-cap growth tends to outperform in the subsequent period — a classic rotation pattern where capital shifts from slower-moving value names into higher-beta growth. Under these conditions, IJT has returned 18% annualized, versus 6% when IJJ momentum was stronger.
Muted recent returns in IJT itself suggest a bounce-back setup: IJT's own six-month return stands at just 3%, reflecting the broader pressure on small-cap growth names. Historically, periods of subdued trailing returns for IJT have been followed by above-average forward performance — a contrarian mean-reversion signal. When IJT's six-month return has been at this level or lower, it has subsequently returned 15% annualized, compared to 8% following periods of stronger recent gains.
Steady fed funds rate provides a supportive financing backdrop: As with IJJ, the flat 0% month-over-month change in the federal funds rate (DFF) benefits small-cap growth companies, which are often more reliant on variable-rate debt and credit facilities. When the fed funds rate has been stable or declining, IJT has returned 11% annualized, versus 9% during periods of rate increases.

IJR — iShares Core S&P Small-Cap 600 ETF

IJR provides broad exposure to 600 small-cap U.S. stocks across all sectors, making it a barometer for the domestic small-company landscape.

Falling 5-year Treasury yields significantly boost small-cap prospects: The 12-month change in the 5-year Treasury yield (DGS5) has plunged -182% on a relative basis, reflecting a sharp decline in intermediate-term borrowing costs. Small-cap companies are disproportionately affected by changes in the yield curve because they rely more heavily on bank lending and floating-rate debt priced off intermediate maturities. When 5-year yields have declined this steeply, IJR has returned 24% annualized, compared to just 6% when yields were rising.
Cooling materials sector momentum reduces input-cost headwinds: The 14-month Relative Strength Index of the Materials Select Sector SPDR (XLB) trading volume sits at 148%, indicating that materials sector activity — often a proxy for commodity and input cost pressures — is elevated but beginning to show signs of mean reversion. When this RSI reading has been at this level or lower, it has historically corresponded to easing raw material cost pressures for small manufacturers and producers. Under these conditions, IJR has returned 20% annualized, versus 5% otherwise.
Contained energy sector gains leave room for broader small-cap strength: The 12-month price change in the Energy Select Sector SPDR (XLE) is 25%. While energy has been a standout performer due to the Iran conflict, a 12-month gain at this level (rather than more extreme spikes) suggests energy costs have not yet reached the tipping point that crushes small-cap margins. When XLE's trailing year return has been at 25% or lower, IJR has returned 13% annualized, compared to just 1% when energy prices were surging more aggressively.

XLY — Consumer Discretionary Select Sector SPDR

XLY tracks large-cap consumer discretionary companies — retailers, automakers, media, and e-commerce firms whose revenue is closely tied to consumer spending power.

Modest staples gains suggest consumers aren't in full defensive mode: The six-month return on the Consumer Staples Select Sector SPDR (XLP) is 4%. When defensive staples have delivered moderate rather than outsized gains, it signals that investors haven't fully rotated into a risk-off posture — a positive sign for discretionary spending. Under these conditions, XLY has returned 16% annualized, versus just 2% when staples performance was stronger (suggesting deeper risk aversion).
Declining 5-year yields support consumer borrowing and spending: Identical to the IJR signal, the 12-month change in the 5-year Treasury yield (DGS5) is -182%. Lower intermediate-term yields directly reduce auto loan, personal loan, and adjustable mortgage costs — all of which flow into consumer discretionary spending. When 5-year yields have declined this sharply, XLY has returned 16% annualized, compared to 8% when yields were rising.
Energy costs have not yet crossed the consumer pain threshold: The 12-month price change in XLE is 25%. Rising energy prices act as a tax on consumer wallets, but at 25% trailing gains, the impact remains manageable for most households. The data is clear on the risk, however: when XLE's 12-month return has exceeded this level, XLY has returned -4% annualized — a sharp contrast to the 14% annualized return when energy gains have been at 25% or below. This indicator underscores why any further escalation in the Iran conflict and resulting oil price spike is the primary risk to monitor for this pick.

Conclusion

The indicators behind this month's five picks tell a coherent story. A Fed on hold, declining Treasury yields across the curve, moderate equity volatility, and energy prices that — while elevated — have not yet broken through the threshold that historically crushes small-cap and consumer sectors. The Iran conflict remains the wildcard: further escalation in the Strait of Hormuz could push oil prices and XLE gains beyond the levels where these signals remain favorable, particularly for IJR and XLY. But as of the latest data, rate-sensitive small- and mid-cap names along with gold are positioned in the sweet spot where multiple independent indicators are flashing green simultaneously.

Whether you're positioning for a rate-cut catalyst later this year or hedging geopolitical uncertainty with GLD, the data suggests April could reward investors who follow the signals — and we hope your portfolio continues to TrendWell.

This article is for informational purposes only and does not constitute financial advice.

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