Sign in Subscribe
2 min read

Jul-25 Outlook

July ETF Outlook — 5 Data‑Driven Picks for the Month Ahead

TrendWell Digest’s model highlights XLK, IJK, IJR, IYR, and IJJ as the strongest opportunities for July. Across 24 years of history (October 2000–present), when the current set of signals aligned or better, this basket delivered an average annualized return of 17 %, far exceeding periods when the same signals were weaker.

June closed with equities hovering near record highs despite mixed economic data: headline CPI decelerated for a third straight month, the Fed kept rates steady while signalling a potential cut later this year, and a slight uptick in weekly jobless claims tempered sentiment. Sector‑specific volatility compressed, yield‑curve steepening resumed, and energy prices softened—macro themes that echo the quantitative drivers behind this month’s picks.

XLK | Technology Select Sector SPDR Fund

Tracks: Large‑cap U.S. technology leaders.

  • T10Y2Y six‑month change +390 % → a sharply steeper yield curve (T6MM‑T10Y2Y) historically aligns with multiple expansion in growth tech. XLK returned 86 % when the curve steepened this much, versus 8 % when flatter.
  • Mid‑cap growth volatility at 115 % of norm (StdevT12MVol‑IJJ) → heightened mid‑cap swings often precede defensive rotation into mega‑cap tech; XLK gained 38 % vs. 6 % when volatility was lower.
  • Materials RSI at 122 % of historical (RSIVol‑XLB) → an overbought materials sector typically shifts flows into software and semis; XLK rose 27 % vs. 7 % otherwise.

IJK | iShares S&P Mid‑Cap 400 Growth ETF

Tracks: U.S. mid‑cap growth stocks.

  • XLV six‑month change −1 % (T6MM‑XLV) → health‑care softness historically sparks catch‑up rallies in mid‑cap growth; IJK returned 18 % vs. 5 % when XLV outperformed.
  • Manufacturing payrolls flat (T3MM‑LNU01300000) → a 0 % three‑month change signals cooling labor costs; IJK gained 15 % vs. 0 % when payroll momentum was stronger.
  • One‑year Treasury yield near 86 % of 52‑week peak (52WkR‑T1YFF) → easing short‑term rates lower funding costs; IJK advanced 12 % vs. –3 % when yields were higher.

IJR | iShares S&P Small‑Cap 600 ETF

Tracks: U.S. small‑cap companies.

  • Telecom volume beta to SPY at 1 203 % (SPYBetaVol‑IYZ) → a liquidity surge in IYZ often foreshadows broader small‑cap rallies; IJR returned 23 % vs. 9 % when muted.
  • XLE twelve‑month change −6 % (T12MM‑XLE) → softer energy prices historically lift domestic small‑cap margins; IJR gained 16 % vs. 8 % otherwise.
  • Telecom correlation with SPY at 2 313 % of norm (SPYCorrel‑IYZ) → extreme positive correlation signals risk‑on breadth; IJR returned 16 % vs. 10 % when lower.

IYR | iShares U.S. Real Estate ETF

Tracks: U.S. REITs and real‑estate operating companies.

  • Small‑cap value volatility at 99 % of norm (StdevT12M‑IJS) → elevated small‑cap swings often prompt a defensive bid for REIT cash flows; IYR returned 17 % vs. 2 % when calmer.
  • XLP three‑month change 0 % (T3MM‑XLP) → flat staples performance historically precedes a hunt for yield in property; IYR gained 16 % vs. 1 % when staples rallied.
  • XLV six‑month change −1 % (T6MM‑XLV) → modest health‑care weakness correlates with REIT outperformance; IYR posted 15 % vs. 3 % otherwise.

IJJ | iShares S&P Mid‑Cap 400 Value ETF

Tracks: U.S. mid‑cap value stocks.

  • IJR volatility at 103 % of norm (StdevT12M‑IJR) → a pickup in small‑cap volatility historically precedes mean‑reversion flows into mid‑cap value; IJJ returned 22 % vs. 5 % when volatility was subdued.
  • XLV six‑month change −1 % (T6MM‑XLV) → sector rotation theme mirrors IJK/IYR; IJJ gained 22 % vs. 5 % otherwise.
  • Manufacturing payrolls flat (T3MM‑LNU01300000) → stable industrial hiring has historically benefited cyclical value; IJJ posted 17 % vs. 1 % when payrolls grew.

Compressed sector volatility, a steepening curve, and a patient Fed underpin a constructive backdrop for these data‑driven picks heading into July.

We’ll keep delivering zero‑hype insights—and we hope your portfolio continues to TrendWell.

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