Last week was fantastic for energy investors.
For everyone else? Not so much…
The State Street Energy Select Sector SPDR ETF (XLE), which includes all of the energy stocks in the S&P 500 Index, tacked on 2% last week. That brings its year-to-date growth in 2026 to almost 30%.
Utilities also managed to eke out a small gain. The State Street Utilities Select Sector SPDR ETF (XLU) added 0.5% last week.
But every other sector was down significantly, as the prospect of a prolonged war in Iran weighed on the markets.
Financials had a particularly rough week, with the State Street Financials Select Sector SPDR ETF (XLF) down 3.3%. As a result, it remains the worst-performing sector in 2026, down close to 11% year to date.
Of course, the weakness in financials goes far beyond Iran war jitters.
Investors are concerned that years of easy lending are about to come home to roost in the private credit market, particularly among tech and software companies facing mounting pressure from AI.
Turning back to the Iran war, crude oil prices have retreated below $100 per barrel amid the closure of the Strait of Hormuz. But investors are seeing signs that this key trade passage might be opening…
Over the weekend, two tankers of liquefied petroleum gas successfully passed through the strait en route to India.
Of course, it’s a mistake to read too deeply into this. The situation changes by the hour, and if you’re attempting to trade the headlines, you’re very likely to get whipsawed.
Unless you happen to run a ring of spies with better intel than the CIA, you and I don’t have an information advantage here. Trading war headlines is a game we can’t win.
That’s why I recommend you tune out as much of the noise as possible and follow my Green Zone Power Ratings system.
I want to emphasize again that energy stocks were rising long before the Iran war started. And they have consistently rated well on my system for months.
Simply following my system would have positioned you fantastically well for this environment, with or without your own private network of James Bonds feeding you intel.
I recommended leading fertilizer company CF Industries (CF) a little over two weeks ago for my Green Zone Fortunes readers. So far, we’re already up about 24%.
While I noted in my recommendation that Iran was a major wild card and that a closure of the Strait of Hormuz would potentially send fertilizer prices sharply higher, I had no inside information that war was imminent or that Iran would be closing the strait just days later.
I recommended the stock because it ranked well in my Green Zone Power Ratings system and was well positioned to profit from a long-term trend toward higher-protein diets enabled by the wealth created in the AI economy. The war simply meant that returns I expected over months happened in days.
That’s how you should be approaching the war. Be aware of it, but focus your trading and investing in areas where you have an exploitable edge.
Key Insights:
- There are signs that the stronghold on Hormuz might be loosening.
- But trying to trade war headlines is asking to be whipsawed.
- Simply following the system would have put you in the right sectors before the war broke out.
Energy Still Looking Strong
For the second week running, energy remains the only major sector really putting points on the board.
I ran my customary screen of the biggest movers in the energy sector 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.
Here’s what I came up with:
There are quite a few holdovers from last week. Occidental Petroleum (OXY), APA Corp (APA), Devon Energy (DVN), ConocoPhillips (COP) and Phillips 66 (PSX) are all on the Big Movers list for the second week running.
If you’re looking to add new energy exposure, this is like shooting fish in a barrel. Every stock on the list rates as “Bullish” on my Green Zone Power Ratings system, with the sole exception of Occidental Petroleum. And several on the list rate as “Strong Bullish.”
Warning Signs in Financials
You know me.
I take no pleasure in doom or gloom.
And I should also point out that I have no inside information that suggests a wipeout in the private credit market is coming. That market is notoriously opaque, and obtaining quality information on the state of private loan books is next to impossible right now.
With that said, my Green Zone Power Ratings System is signaling caution right now.
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.
Frankly, there’s nothing to see here. Literally every stock on the list is rated “Bearish” in my system.
Again, I’m not predicting a 2008-style financial sector meltdown. That may or may not happen. It’s just too early to say based on the information we have.
Regardless, my system shows that the financial sector is mostly uninvestable right now. Buying the dip here will likely lead to disappointment.
To good profits,
Adam O’Dell
Editor, What My System Says Today
