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Mar-26 Outlook

TrendWell Digest — March 2026 Bullish ETF Outlook

March’s model highlights five ETFs with predictive drivers aligned at levels that have historically supported strong forward returns. When these conditions have appeared since October 2000 (25+ years of data), the average annualized return across this group has been 11%.

The backdrop: February data showed moderating inflation and a steady federal funds rate, reinforcing expectations that policy remains on hold while growth stabilizes. Treasury yields softened and volatility stayed contained, conditions that directly influence several of this month’s indicators — particularly interest-rate spreads, rate momentum, and sector-specific price strength.

XLV — Health Care Select Sector SPDR Fund

Tracks large-cap U.S. healthcare companies within the S&P 500.

  • Three-month % change in industrial production is flat (0%)
    Industrial production is a gauge of manufacturing activity. Flat growth historically favors defensive sectors like healthcare. When this was this weak or weaker, 20% annualized vs. 2% when stronger. Slowing production tends to redirect capital toward stable earnings sectors such as healthcare.
  • Twelve-month price change of XLV at 8%
    A moderate 12-month gain suggests steady accumulation without overheating. When XLV’s 12-month change was 8% or lower, returns averaged 13% vs. 1% when more extended. This reflects healthcare’s tendency to grind higher after measured advances.
  • Six-month price change of XLV at 17%
    Sustained but not euphoric intermediate momentum has historically been constructive. When this was at this level or lower, returns averaged 9% vs. -5% when weaker. Healthcare leadership often persists during late-cycle slowdowns.

GLD — SPDR Gold Shares

Tracks the price of physical gold bullion.

  • Six-month % change in XLY volatility at 116%
    Rising consumer discretionary volatility signals uncertainty in risk assets. When this was this elevated, GLD returned 41% annualized vs. 9% when calmer. Gold benefits from capital rotation during equity instability.
  • Six-month standard deviation of the 3-month Treasury vs. Fed Funds spread at 36% of historical range
    Low volatility in the short-rate spread suggests policy clarity. When rate-spread volatility was similarly contained, GLD averaged 24% vs. 10% when more erratic. Stable policy expectations often support gold accumulation.
  • Long-term Treasury yield level elevated
    Higher long-term yields can reflect inflation or fiscal risk concerns. When yields were at or above this level, GLD returned 19% vs. 9% when lower. Structural yield pressure often coincides with gold demand as a hedge.

DIA — SPDR Dow Jones Industrial Average ETF Trust

Tracks 30 large-cap U.S. blue-chip companies.

  • Prior month % change in the effective federal funds rate at 0%
    A pause in rate hikes historically stabilizes blue-chip earnings expectations. When DFF was unchanged, DIA returned 8% annualized vs. 8% when rates were more volatile — indicating resilience but limited downside in steady-rate regimes.
  • Six-month price change of XLV at 17%
    Healthcare strength often coincides with broader defensive leadership. When this was at this level, DIA averaged 8% vs. -8% when weaker. Defensive sector leadership tends to cushion large-cap indices.

IJS — iShares S&P Small-Cap 600 Value ETF

Tracks U.S. small-cap value stocks.

  • Twelve-month % change in the 5-year Treasury yield at -22%
    Falling intermediate yields ease financing pressure for small caps. When this declined this sharply or more, IJS returned 16% vs. 0% when yields rose. Lower borrowing costs disproportionately aid smaller firms.
  • Twelve-month price change of XLE at 23%
    Strong energy performance often signals cyclical expansion. When XLE posted similar gains, IJS averaged 15% vs. -1% when weaker. Energy-led growth phases typically spill over into small-cap value.
  • Prior month % change in DFF at 0%
    A Fed pause reduces rate uncertainty. When DFF was flat, IJS returned 14% vs. 7% when rates moved higher. Stable funding conditions are critical for smaller companies.

XLY — Consumer Discretionary Select Sector SPDR Fund

Tracks U.S. consumer discretionary stocks.

  • Twelve-month price change of XLE at 23%
    Energy sector strength often reflects consumer demand resilience. When XLE showed this level of strength, XLY averaged 16% vs. -3% when weaker. Rising energy activity historically aligns with solid consumption trends.
  • Twelve-month % change in the 5-year Treasury yield (DGS5) at -22%
    Declining intermediate yields support credit-sensitive spending. When DGS5 fell this much or more, XLY returned 15% vs. 2% when yields rose. Lower financing costs boost autos, housing-related goods, and retail demand.
  • Prior month % change in DFF at 0%
    Policy stability encourages consumer confidence. When DFF was unchanged, XLY returned 13% vs. 9% when tightening resumed.

Conclusion

March’s alignment reflects a consistent theme: moderating rates, contained policy volatility, and selective sector leadership. Defensive strength (XLV), gold resilience (GLD), stable large caps (DIA), and rate-sensitive cyclicals (IJS, XLY) are all supported by data patterns that have historically delivered above-average returns.

With inflation cooling and the Fed maintaining a steady stance, these drivers reinforce a market environment favoring balance between defensives and selective cyclicals — a constructive mix based on 25 years of historical evidence.

At TrendWell Digest, we remain focused on where the data aligns — and we hope your portfolio continues to TrendWell.

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