Is it really over?
President Donald Trump announced yesterday that America had reached a ceasefire deal with Iran, punctuating the news with a simple message: “Let the oil flow!”
The ceasefire is effective immediately, though the details remain unclear. The Strait of Hormuz may not fully reopen for several days, and formal negotiations to finalize the deal could still be weeks away.
There are also reasons for caution.
Any renewed fighting involving Israel and Hezbollah could quickly destabilize the situation and put the deal at risk. For now, however, Wall Street is embracing the optimistic scenario. Major indexes are surging this morning as investors bet the worst of the conflict may truly be behind us.
And that wasn’t the only headline driving markets.
SpaceX (SPCX) followed up its wildly successful IPO on Friday with another strong move higher this morning. Shares are now up nearly 30% from their offering price, giving the company a market capitalization above $2.2 trillion.
The rally has pushed Elon Musk past another milestone.
He is officially the world’s first trillionaire.
Overall, it was a great week for stocks. Nine of the 11 major S&P 500 Index industrial sectors finished higher, while the two laggards were barely in the red.
The State Street Materials Select Sector ETF (XLB) finished the week up 3.1%, topping all sectors. The State Street Energy Select Sector ETF (XLE) brought up the rear, but its 0.2% loss on the week is little more than a rounding error.
The State Street Technology Select Sector ETF (XLK), riding the wave of enthusiasm surrounding SpaceX’s IPO, chalked up a 2.5% gain on the week.
Is all of this good news a little too good?
It’s too early to say.
But it’s important to keep our emotions in check. It’s easy to get complacent when everyone’s bullish and the market is going to the Moon (or perhaps Mars! This is the SpaceX era after all).
Let’s see what my system has to say about it.
Key Insights:
- The market’s advance was broad last week, with most sectors participating.
- Materials performed the strongest, though tech had a great week, too.
- Even the weakest sectors – energy and communications – held up well.
Materials Leading the Way
Materials tend to thrive when the economy is booming. They also offer good inflation hedges, making them one of the market’s classic cyclical plays.
Between the overall strong economy and nagging inflation, this year has delivered a near-perfect backdrop for the sector.
As a result, XLB is up about 15% in 2026 – trailing only XLE and XLK.
The big question now is whether this rally still has room to run.
Let’s take a closer look…
I ran my customary screen of the biggest movers in the sector last week.
Ordinarily, I look for stocks that were also still within 10% of their 52-week highs last week. The idea is to look for solid, market-leading stocks that are getting stronger.
Interestingly, with the materials sector’s volatility as of late, that wasn’t possible. Most of the biggest movers last week are significantly below their 52-week highs.
Only three of the stocks on the list rate “Bullish” in my Green Zone Power Ratings system: Freeport-McMoRan (FCX), Steel Dynamics (STLD) and Nucor Corp (NUE). All three are also trading close to their 52-week highs.
Steel Dynamics and Nucor are, of course, steel makers. Both are well positioned to benefit from Trump’s ongoing reshoring of the steel industry through tariffs and restrictive trade policies.
But the more interesting play is Freeport McMoRan.
Freeport is a leading copper miner with significant gold exposure as well. It’s also a direct beneficiary of the AI infrastructure spending boom.
You see, copper is not only essential for electrical and network wiring, but also a critical component for cooling systems.
A conventional data center uses around 10,000 tons of copper. The new hyperscaler AI data centers require 50,000 tons or more.
And with tech giants racing to build AI infrastructure, new data centers are being announced at a remarkable pace. As long as that buildout continues, Freeport is poised to enjoy immense growth.
How Does Energy Look Post-War?
I write this, energy stocks are dropping today following the ceasefire announcement.
Remember, last week, I discussed how Iran war headlines have been whipsawing energy stocks for well over a month now.
So… what do we do about it?
As I’ve said consistently since the conflict began, it’s a mistake to trade headlines. There’s just too much noise, and the news can turn on a dime.
Today, it appears the war is over. Tomorrow, it could flare up again.
Trading on headlines isn’t investing. It’s an emotional reaction.
We don’t do that here. Instead, we proactively follow a system.
So, I ran my customary screen of the sector’s biggest losers for the week that are still trading within 10% of their 52-week lows. The idea is to find beaten-down gems that look poised to recover.
After the massive rally this year, finding energy stocks within 10% of their 52-week low was a bit of a challenge, so I loosened that criteria. Here’s what I came up with:
There’s a lot of green here. Of the nine stocks on the list, all but one rate as “Bullish” or “Strong Bullish.”
I can’t tell you when the headline-driven whipsaw action will stop. Your guess is as good as mine.
But I can tell you that my system still sees the energy sector as attractive.
So, until something changes, we should continue to buy the dip.
To good profits,
Adam O’Dell
Editor, What My System Says Today
