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Apr-25 Outlook

This month, our data-driven analysis highlights five promising ETF symbols: XLU, IJR, DIA, IJS, and IJJ. Historically, since October 2000, when all predictive drivers aligned, these ETFs averaged an impressive 21% annualized return, compared to just 6% when conditions were weaker. Recent market developments—including moderated inflation, stable Federal Reserve outlook, and cautious investor sentiment—align favorably with these indicators.

XLU (Utilities Select Sector SPDR Fund)

Tracks major utility providers—electricity, water, and natural gas.

  • April performance: Historically, April returns for XLU average 33%, compared to 5% in other months.
  • Low volatility in financial sector (XLF): Six-month volatility at 52% of historical levels signals financial market stability, historically driving XLU returns of 15% versus 4% otherwise.
  • Low volatility in consumer discretionary sector (XLY): Three-month volatility at 14% of historical levels indicates economic stability benefiting defensive sectors, historically returning 15% versus 4% otherwise.

IJR (iShares S&P SmallCap 600 ETF)

Tracks small-cap U.S. stocks, offering growth potential.

  • Healthcare sector decline (XLV): Six-month decline of 6% typically signals a rotation into growth stocks, historically benefiting IJR with returns of 49% versus 9% otherwise.
  • High small-cap volatility (IJR): Twelve-month volatility at 101% of historical average creates valuation opportunities, historically returning 22% versus 5% otherwise.
  • Moderate momentum in small-cap consumer sectors (M1NS): Recent six-month growth of 2% indicates steady consumer activity, historically returning 11% versus 4% otherwise.

DIA (SPDR Dow Jones Industrial Average ETF)

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

  • Stable industrial production (LNU01300000): Three-month production change flat (0%) historically associated with market stability, returning 14% versus 6% otherwise.
  • Elevated volatility in small-cap value sector (IJS): Twelve-month volatility at 95% historically shifts investors toward stable large-cap stocks like DIA, returning 9% versus 6% otherwise.
  • Strong treasury vs. Fed rate spread (T3MFF): Recent month-over-month increase of 171% indicates strong liquidity, historically returning 8% versus 4% otherwise.

IJS (iShares S&P SmallCap 600 Value ETF)

Tracks small-cap value-oriented U.S. stocks.

  • Strong treasury vs. Fed rate spread (T3MFF): Recent increase of 171% month-over-month historically supports small-cap value stocks, returning 13% versus 9% otherwise.

IJJ (iShares S&P Mid-Cap 400 Value ETF)

Tracks mid-cap value-oriented U.S. stocks.

  • Healthcare sector decline (XLV): Six-month decline of 6% historically positive for mid-cap value stocks, returning 53% versus 14% otherwise.
  • Elevated volatility in small-caps (IJR): Twelve-month volatility at 101% drives investors toward mid-cap stability, historically returning 23% versus 8% otherwise.
  • Reduced correlation with S&P 500 (SPYCorrel-IYZ): Correlation currently at -265% of historical average, suggesting strong diversification potential, historically returning 13% versus 3% otherwise.

Conclusion

With moderated inflation pressures, stable Fed policies, and cautious optimism in the market, these ETFs appear well-positioned according to historical performance and current indicators. We look forward to delivering continued insights and hope your portfolio continues to TrendWell.

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