Rotation from leaders into laggards is becoming more apparent in the market, and low-volatility stocks are among those that are benefiting. This is a notable shift after a technology-led advance, and it supports the idea that market leadership is broadening beneath the surface. The Invesco S & P 500 Low Volatility ETF (SPLV) exemplifies this rotation, exhibiting improved momentum in both absolute and relative terms. SPLV is poised to trend higher in the coming weeks within the context of a gradual long-term uptrend. The recent upmove is confirmed by a positive shift in the weekly MACD, reflecting improving intermediate-term momentum. The rally follows a successful test of key cloud-based support, denoted by the shaded area on the chart, which keeps the broader trend constructive. Initial resistance is close to the prior highs near $78, a little more than 2% above current levels. The relative setup for SPLV is naturally improving as the S & P 500 Index (SPX) consolidates. The ratio of SPLV to the SPX has moved back above its 50-day moving average (MA) after a prolonged period of underperformance, suggesting low-volatility stocks may continue to outperform in the short term. The longer-term relative trend is not yet bullish, with the declining 200-day MA still overhead, but the recent improvement fits with broadening leadership. SPLV’s largest industry group exposure is electric utilities, comprising roughly 23% of the ETF, followed by REITs at nearly 18% and insurance at about 12%. These groups tend to benefit when investors favor more defensive exposure and seek lower volatility than the SPX. We highlighted insurance stocks last week as a source of improving relative strength, and that theme remains intact. REITs have also stabilized, and electric utilities are showing a constructive technical setup. The S & P 500 Electric Utilities Index is holding above cloud-based support, keeping its cyclical uptrend intact. The weekly stochastics have turned higher from oversold territory, a bullish near-term development that previously marked corrective lows in both January 2025 and January 2026. That signal supports upside follow-through in the coming weeks, with initial resistance near the prior highs, about 6.5% above current levels. As SPLV’s largest industry exposure, improvement in electric utilities is a tailwind for the ETF. Overall, SPLV is benefiting from a broadening in market leadership and participation. With momentum improving behind the ETF, and its largest industry groups showing better technical setups, we expect low-volatility stocks to remain a source of relative strength in the weeks ahead. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer. Fairlead Strategies Disclaimer: This communication has been prepared by Fairlead Strategies LLC (“Fairlead Strategies”) for informational purposes only. This material is for illustration and discussion purposes and not intended to be, nor construed as, financial, legal, tax or investment advice. You should consult appropriate advisors concerning such matters. This material presents information through the date indicated, reflecting the author’s current expectations, and is subject to revision by the author, though the author is under no obligation to do so. This material may contain commentary on broad-based indices, market conditions, different types of securities, and cryptocurrencies, using the discipline of technical analysis, which evaluates the demand and supply based on market pricing. The views expressed herein are solely those of the author. This material should not be construed as a recommendation, or advice or an offer or solicitation with respect to the purchase or sale of any investment. The information is not intended to provide a basis on which you could make an investment decision on any particular security or its issuer. This document is intended for CNBC Pro subscribers only and is not for distribution to the general public. Certain information has been provided by and/or is based on third party sources and, although such information is believed to be reliable, no representation is made with respect to the accuracy, completeness, or timeliness of such information. This information may be subject to change without notice. Fairlead Strategies undertakes no obligation to maintain or update this material based on subsequent information and events or to provide you with any additional or supplemental information or any update to or correction of the information contained herein. Fairlead Strategies, its officers, employees, affiliates and partners shall not be liable to any person in any way whatsoever for any losses, costs, or claims for your reliance on this material. Nothing herein is, or shall be relied on as, a promise or representation as to future performance. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Opinions expressed in this material may differ or be contrary to opinions expressed, or actions taken, by Fairlead Strategies or its affiliates, or their respective officers, directors, or employees. In addition, any opinions and assumptions expressed herein are made as of the date of this communication and are subject to change and/or withdrawal without notice. Fairlead Strategies or its affiliates may have positions in financial instruments mentioned, may have acquired such positions at prices no longer available, and may have interests different from or adverse to your interests or inconsistent with the advice herein. Any investments made are made under the same terms as nonaffiliated investors and do not constitute a controlling interest. No liability is accepted by Fairlead Strategies, its officers, employees, affiliates, or partners for any losses that may arise from any use of the information contained herein. Any financial instruments mentioned herein are speculative in nature and may involve risk to principal and interest. Any prices or levels shown are either historical or purely indicative. This material does not take into account the particular investment objectives or financial circumstances, objectives or needs of any specific investor, and are not intended as recommendations of particular securities, investment products, or other financial products or strategies to particular clients. Securities, investment products, other financial products or strategies discussed herein may not be suitable for all investors. The recipient of this information must make its own independent decisions regarding any securities, investment products or other financial products mentioned herein. The material should not be provided to any person in a jurisdiction where its provision or use would be contrary to local laws, rules, or regulations. This material is not to be reproduced or redistributed absent the written consent of Fairlead Strategies.
Low volatility stocks are suddenly turning into market leaders, Katie Stockton says
