{"id":3783,"date":"2026-01-12T23:05:45","date_gmt":"2026-01-12T23:05:45","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=3783"},"modified":"2026-01-12T23:06:34","modified_gmt":"2026-01-12T23:06:34","slug":"01-12-2026-valuengine-weekly-market-summary-commentary","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/01-12-2026-valuengine-weekly-market-summary-commentary\/","title":{"rendered":"01\/12\/2026 ValuEngine Weekly Market Summary & Commentary"},"content":{"rendered":"

U.S. equity markets continued their constructive start to 2026, with broad participation across styles, sectors, and market capitalizations. While mega-cap technology continues to attract attention, recent performance data reinforces a theme we have been highlighting for several months \u2014 rotation toward value, cyclicals, and smaller capitalization stocks remains intact.<\/p>\n

In the below tables we use major ETF\u2019s as a proxy for some major indexes as well as each of the sector groups into which we divide the overall markets. Tracking these over time provides a more defined picture of the US markets than simply tracking major indexes. This is followed by notable individual stock movers over the past month, before presenting our full strategy outlook.<\/p>\n

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Strategy Note:<\/strong><\/p>\n

Using State Street\u2019s SPDR ETF universe as a microcosmic subset to take a quick look at year-to-date 2026 performance, the top performing mini-sector index ETFs thus far are Aerospace (XAR<\/strong>) and Metals & Mining (XME<\/strong>) at 14.3% and 12.9% respectively. XME<\/strong> gets our highest rating of 5 (Strong Buy). Meanwhile, Pharmaceuticals (XPH<\/strong>) and Utilities (XLU<\/strong>) are off to the lowest starts with price declines of about 0.4% thus far.<\/p>\n

The rotation themes we noted as prevalent in the fourth quarter of 2025 are still present at the start of 2026. Although the S&P 500 Portfolio ETF (SPYM<\/strong>) is up 1.8%, the State Street SPDR S&P 500 Value ETF (SPYV<\/strong>) is up 2.5% while growth counterpart SPYG<\/strong> has risen just 1.1%. The differences in market cap size are even more dramatic. State Street SPDR S&P 400 Mid Cap Portfolio ETF (SPMD<\/strong>) is up 4.7% while State Street SPDR S&P 600 Small Cap Portfolio ETF gained 5.1%. Size matters, but in the past four months it has swung back to the smaller the better.<\/p>\n

The relative under performance in the first six days of the trading year notwithstanding, ValuEngine\u2019s ratings are unperturbed. The Technology and Health Care State Street Select Sector SPDR ETFs, XLK<\/strong> and XLV<\/strong>, respectively, still get our highest rating of 5.<\/p>\n

Among all the 2025 outlooks we perused this week, we are particularly struck by the bearish persistence of investment legend Jeremy Grantham, co-founder of Boston-based Grantham, Mayo and Van Otterloo.\u00a0 While reading a recent Barron\u2019s interview, one quote took his pessimism to new extremes: \u201cI would recommend zero exposure to the US, but if you have to own US stocks, own quality stocks.\u201d<\/em><\/p>\n

In GMO parlance, these are defined as companies with high, stable returns, consistent earnings and dividend growth, low debt, and a degree of monopoly power or price control. These are the factor guidelines in the stated objective of Grantham Mayo\u2019s active ETF QLTY<\/strong>. QLTY<\/strong> and its holdings fit the same profile as three much larger U.S. equity quality factor ETFs: iShares MSCI USA Quality Factor ETF (QUAL<\/strong>), Invesco S&P 500 Quality ETF (SPHQ<\/strong>), and Fidelity Quality Factor ETF (FQAL<\/strong>). All are rated 3 (Hold) at the present time by ValuEngine.<\/p>\n

To look at individual stocks in QLTY<\/strong>.\u00a0 We used ETFdb, a TMX VettaFi product, as the source for QLTY<\/strong>\u2019s holdings and found two stocks rated 5 (Strong Buy): Broadcom (AVGO<\/strong>) and Eli Lilly and Company (LLY<\/strong>). Ten additional holdings are rated 4 (Buy), including Lam Research (LRCX<\/strong>), Alphabet (GOOGL<\/strong>), and KLA Corporation (KLAC<\/strong>). Having roughly one-third of its holdings rated 4 or 5 approximately doubles the percentage of recommended stocks in our broader universe, positioning QLTY<\/strong> for potentially superior performance in the months ahead.<\/p>\n

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