This Red-Hot Sector Isn't Slowing Down
The markets respond to two emotions: fear and greed. It just depends on which one is in control...
For the past few years, greed has led stocks on a powerful move higher. Folks have been more worried about missing out than making bad decisions. When everyone rushes to buy, prices rise.
Then, like clockwork, greed turns to fear. "Easy money" investments start to look shaky. And the herd changes direction... with investors running for cover.
Today's economic landscape is fraught with geopolitical turmoil and signs of instability. Stocks haven't crashed, but we're quickly approaching a correction. And the general sentiment is no longer greed... It's fear.
You can still find places to make money, though. In fact, one sector just finished one of its best three-month stretches ever. And according to history, we can expect those gains to continue...
Soaring Oil Prices Are Boosting This Energy Rally
Unlike some other sectors, energy stocks aren't as tied to the direction of the overall market. They rise and fall with oil and gas prices.
The war in the Middle East has sent oil soaring. That's hurting most sectors... But it's a tailwind for energy stocks. And it's accelerating a trend that was already underway.
You see, energy stocks have soared an incredible 27% over the past three months. Take a look...
Energy stocks went nowhere for most of 2025. But they began rising in mid-December. And the rally hasn't slowed down since.
Again, the sector is up 27% in that period... several years' worth of returns in just a few months. But don't worry – you haven't missed the entire rally. History shows the upside isn't over yet.
We've seen nine similar three-month energy-stock rallies since the data begins in 1989. And after these setups, energy stocks tend to keep moving higher. Take a look...
Energy stocks usually don't get much attention compared with other sectors. But they have a long history of generating strong returns.
The typical one-year gain is 6.7%. And you can do much better when prices are booming...
Similar setups led to gains of 4.4% in six months and 16.2% over a year. That's massive outperformance.
Of course, most folks will look at the recent rally and assume they missed the run-up. That's a mistake. And while the overall market looks shaky... this opportunity could be more valuable to investors than ever.
We know how powerful trends can be. When prices are rising, they tend to keep rising. And for energy stocks, a massive three-month rally means more gains are likely.
One easy way to take advantage of this is through the State Street Energy Select Sector SPDR Fund (XLE). The fund gives exposure to entire energy sector. It has been rising fast. And given the current setup, we can expect those gains to continue.
Good investing,
Brett Eversole
Further Reading
"Most of investors' worst fears of the past decade haven't mattered much," Brett writes. You can nearly always find a reason to sell if you look hard enough. But history shows that few of investors' biggest worries spiral into worst-case scenarios.
Global supply chains have grown increasingly complex due to the war in the Middle East. But that could boost profits for a group of businesses that thrive in uncertain times like these. So this could be a setup for major upside as uncertainty continues to rise.