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Nov-26 Outlook

TrendWell Digest: November 2026 ETF Picks

The Federal Reserve held rates at 3.75–4.00% on October 28, six days before the midterms, but two officials dissented in favor of a hike and futures now price roughly an 83% chance of one in December, after September CPI accelerated to 3.7% on a 9.1% jump in gasoline. The market’s response was rotation, not retreat: the Nasdaq-100 fell 6.7% as the AI trade unwound, while the Dow gained about 1.7%, the average S&P 500 stock rose 5%, small caps climbed 3.2%, and utilities gained 10%, one of four sectors up more than 9%. Beneath those moves, short-term rates barely budged while the 10-year yield fell 31 basis points from 5.24%, oil surged 14% to six-month highs and then dropped 7% in the first days of November on Iran’s offer to reopen the Strait of Hormuz, and labor force participation held flat as hiring slowed to 29,000 jobs. This month’s five picks line up with that configuration: a stable front end, a labor market neither overheating nor contracting, AI forecasts that read energy and the consumer as flat, and a bank sector still range-bound after September’s drop. Based on 26 years of historical data (back to October 2000), when all of these predictive drivers have aligned as they do now, this group has delivered an average annualized return of 13%.

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

IJJ tracks the S&P MidCap 400 Value Index: mid-sized U.S. companies trading at lower valuations relative to their fundamentals.

  • Labor supply holding steady: The three-month change in the labor force participation rate (LNU01300000) is flat at 0%, and September’s jobs report left participation unchanged at 61.8% even as hiring slowed to 29,000. Surges in participation have historically arrived late in expansions, when wage pressure puts the Fed on alert. A flat labor pool means the job market is neither overheating nor contracting, the mid-cycle backdrop in which domestically focused mid-cap value has done best. IJJ has averaged 21% annualized when participation held flat or slipped, versus 2% when it was rising.
  • Muted AI forecast for energy: Google’s TimesFM AI forecasting model projects just a 1% return next month for energy stocks (XLE), after October’s 14% oil surge gave back 7% in two sessions on Iran’s Hormuz offer. The model reads the rally as spent. Flat energy expectations mean input-cost relief for the industrial and manufacturing names concentrated in mid-cap value. IJJ has averaged 14% annualized when the XLE forecast was 1% or lower, versus -1% otherwise.
  • Front-end pricing held steady: The prior month’s change in the spread between 3-month Treasury yields and the Fed funds rate (T3MFF) was +1%. After September’s sharp widening, bills kept their premium over the policy rate without adding to it: the December hike stayed priced in, and nothing more. A front end that holds rather than retreats has historically meant growth sturdy enough to absorb tighter policy, a setting where cyclical value holds up. IJJ has averaged 12% annualized when T3MFF held at this level or rose, versus 9% otherwise, a modest edge.

IYR — iShares U.S. Real Estate ETF

IYR tracks an index of U.S. real estate companies and REITs across office, industrial, residential, retail, and specialty property.

  • Front-end rates barely moved: The 3-month Treasury bill rate (DTB3) rose about 3% in October, roughly a dozen basis points, with the Fed on hold and the December hike already priced. Over the same month, the 10-year yield fell 31 basis points. REITs are among the most rate-sensitive corners of the equity market: they refinance constantly, and their dividend yields compete directly with cash. A front-end jump hits both at once, and a flat front end removes that pressure. IYR has averaged 11% annualized when the DTB3 monthly change was 3% or smaller, versus -1% when bill yields jumped faster.

XLU — Utilities Select Sector SPDR Fund

XLU tracks the S&P 500 Utilities sector, including electric utilities, multi-utilities, and independent power producers.

  • Still down over three months despite October’s rebound: XLU is off 2% over the past three months. October’s 10% rally only partly reversed the August–September selloff that came as the 10-year yield climbed past 5%. Yield-driven drawdowns in utilities have historically reversed as rate expectations peak, and the three-month reading says the rebound hasn’t yet made the sector extended. XLU has averaged 14% annualized when its three-month return was -2% or lower, versus 2% when it entered the month already up.
  • Front-end pricing held steady: The T3MFF spread’s prior-month change was +1%, with bills keeping their premium over the Fed funds rate as markets held December hike odds near 83%. The Fed’s own projections show just one more hike after that. When the front end holds its premium rather than giving it back, the hiking cycle has historically been near its peak, which is when income investors start locking in utility yields ahead of the eventual turn. XLU has averaged 12% annualized when T3MFF held at this level or rose, versus 0% otherwise.
  • November seasonality: November falls in the group of months in which XLU has historically done better. Seasonality isn’t a mechanism on its own, but it coincides with the start of heating season and the year-end window in which yield-seeking capital rotates toward dividend payers. In November and the other months in this group, XLU has averaged 11% annualized, versus 5% across the remaining months.

XLB — Materials Select Sector SPDR Fund

XLB tracks the S&P Materials Select Sector Index: chemicals, metals and mining, construction materials, and packaging companies.

  • Banks are range-bound, but not frozen: A Hidden Markov Model, an algorithm that classifies market regimes from price behavior, puts the probability that financial stocks (XLF) are in a flat, trendless regime at 95%, after September’s 6% sector drop and a muted October recovery. Materials are the most credit-sensitive cyclical sector: construction, capex, and infrastructure all run on bank lending. When financials are trending in either direction, the credit cycle is moving, and so is raw-material demand. A fully frozen bank sector has historically meant stalled demand. The current reading sits at the edge of the aligned zone: XLB has averaged 15% annualized when the XLF sideways probability was 95% or lower, versus 3% when banks were locked even more firmly in a trendless regime.

IJK — iShares S&P Mid-Cap 400 Growth ETF

IJK tracks the S&P MidCap 400 Growth Index: mid-sized U.S. companies with faster growth profiles.

  • Labor supply holding steady: The flat three-month change in the labor force participation rate (LNU01300000) matters most for growth stocks, which are priced on earnings years out and suffer most when the Fed tightens harder. A labor pool that is neither surging nor shrinking gives the Fed no wage-driven reason to accelerate, even with December’s hike in view. IJK has averaged 19% annualized when participation held flat or slipped, versus 1% when it was rising.
  • Small-cap growth has gone nowhere: Even after October’s small-cap bounce, IJT (iShares S&P Small-Cap 600 Growth) is up just 1% over six months. The summer’s yield spike hit the smallest, most financing-dependent growth companies hardest. When the most speculative growth tier has stalled, there is no froth to unwind, and growth capital has historically migrated up a size tier to mid-caps that fund more of their own expansion. IJK has averaged 16% annualized when the IJT six-month gain was 1% or lower, versus 7% when small-cap growth was already running.
  • Muted AI forecast for consumer discretionary: TimesFM projects about a 1% return next month for consumer-discretionary stocks (XLY), consistent with households squeezed by a 9% monthly jump in gasoline. The relationship is contrarian: restrained expectations for consumer cyclicals have historically marked better entry points for mid-cap growth, because no consumer-driven rally is priced in. IJK has averaged 15% annualized when the XLY forecast was 1% or lower, versus 8% otherwise.

Conclusion

November opens with a hawkish-leaning Fed that has nonetheless paused, an energy market whipsawing on every Hormuz headline, and a stock market that spent October rotating out of the AI megacaps and into nearly everything else. The drivers behind this month’s picks sit on the right side of that rotation: short-term rates holding steady while long yields ease, a labor pool that is neither overheating nor shrinking, small-cap growth and consumer cyclicals with no froth to unwind, and a utilities sector still below where it stood three months ago despite October’s surge. Across mid-cap value in IJJ, mid-cap growth in IJK, defensive yield in XLU, rate-sensitive real estate in IYR, and credit-sensitive cyclicals in XLB, the data points to a favorable alignment as the year-end stretch begins, and we hope your portfolio continues to TrendWell.

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

Sources:

  • CNBC, “Fed rate decision October 2026” live updates, October 28, 2026 (cnbc.com)
  • CNBC, “Here are five key takeaways from the Fed rate decision and Warsh news conference,” October 28, 2026 (cnbc.com)
  • Fox Business, “Federal Reserve makes interest rate decision ahead of midterms,” October 28, 2026 (foxbusiness.com)
  • CNBC, “Consumer prices rose 3.7% annually in September as gas prices skyrocket,” October 14, 2026 (cnbc.com)
  • Goodman Financial, “October 2026 Market Commentary,” November 2, 2026 (goodmanfinancial.com)
  • Seeking Alpha, “October Asset Class Performance Matrix,” November 2026 (seekingalpha.com)
  • CNBC, “Oil jumps 2%, settles at 6-month highs on fears of escalation in Iran,” October 30, 2026 (cnbc.com)
  • Seoul Economic Daily, “Iran Offers to Reopen Hormuz in Two Days; Oil Plunges 7%,” November 3, 2026 (sedaily.com)
  • CNBC, “Labor market faltered in September as jobs increased by just 29,000,” October 2, 2026 (cnbc.com)
  • Quartz, “U.S. economy added 29,000 jobs in September, unemployment held at 4.2%,” October 2, 2026 (qz.com)