In the 90s I realized this myself and created a simple way to capitalize on it. On the MI Board some of you may recall that I posted extensively on the fact that the Short Screens created by members did best coming off of a major bottom. In other words, as Jim wrote, what has done the worst leading up to the bottom typically does the best afterward.

In the last two years my consensus indicators identified two major bottoms that were actionable for this strategy - 4/8/2025 and 3/30/2026. So on the date of the signal I simply find the drop of the SPDRs over the previous three months. I then choose to enter the top five based on the ascending sort - in other words, what has done the best is at the bottom, and what has done the worst is at the top. I buy the ones that have done the worst.

4/8/2025 Signal

Date:   4/8/2025                                            Forward  Forward  Forward  Forward  Forward  Forward  Forward  Forward  Forward  Forward  Forward  Past     Past     Past
Symbol  Sector                                              1-Day    3-Day    5-Day    7-Day    10-Day   1-Mth    2-Mths   3-Mths   6-Mths   9-Mths   12-Mths  3-Mths   6-Mths   12-Mths
XOP     Spdr S&p Oil & Gas Explor & Product                 11.61%   5.55%    4.95%    9.83%    9.50%    14.81%   21.94%   30.09%   33.07%   27.14%   69.77%   -25.55%  -25.13%  -34.64%
XBI     Spdr Series Trust Spdr S&p Biotech Etf              7.28%    6.49%    9.66%    8.78%    13.32%   11.81%   20.73%   21.37%   51.11%   77.30%   87.06%   -24.38%  -28.11%  -22.67%
XLK     Spdr Select Sector Fund Technology                  13.43%   10.36%   11.77%   7.31%    10.19%   21.22%   33.27%   42.83%   62.21%   60.77%   57.94%   -23.02%  -20.88%  -12.24%
XRT     Spdr S&p Retail Etf                                 9.39%    6.76%    5.76%    7.07%    8.44%    14.65%   26.86%   28.82%   36.59%   44.81%   34.00%   -21.45%  -17.15%  -15.64%
XLY     Spdr Select Sector Fund Consumer Discretionary      10.89%   7.59%    7.12%    5.14%    7.93%    14.23%   21.28%   23.69%   34.58%   39.67%   25.92%   -20.72%  -10.08%  -1.47%
KRE     Spdr S&p Regional Banking Etf                       7.83%    0.92%    4.43%    5.35%    9.71%    16.47%   19.46%   30.25%   31.25%   40.49%   41.73%   -18.25%  -10.75%  2.39%
KBE     Spdr S&p Bank Etf                                   7.33%    1.33%    4.49%    4.89%    8.75%    15.40%   18.56%   28.36%   30.28%   39.58%   37.79%   -16.38%  -10.64%  2.18%
XME     Spdr S&p Metals & Mining Etf                        9.70%    10.38%   11.49%   12.29%   13.56%   18.73%   34.10%   40.98%   110.35%  134.39%  132.97%  -15.50%  -22.11%  -21.17%
XLE     Spdr Select Sector Fund Energy Select Sector        7.74%    3.21%    3.41%    6.62%    6.28%    6.76%    9.33%    16.76%   18.37%   23.06%   53.34%   -12.50%  -14.71%  -19.02%
XLI     Spdr Select Sector Fund Industrial                  8.88%    7.95%    8.53%    7.63%    8.39%    16.82%   24.38%   28.25%   34.60%   38.17%   47.08%   -12.08%  -13.38%  -5.83%
XLB     Materials Select Sector Spdr                        8.74%    8.39%    8.83%    8.72%    9.71%    13.56%   18.98%   23.45%   22.23%   28.60%   40.21%   -11.34%  -20.58%  -18.46%
XLC     The Communication Services Select Sector Spdr Fund  8.84%    5.97%    6.94%    4.74%    6.73%    13.41%   20.06%   24.27%   34.98%   36.77%   32.57%   -11.19%  -4.25%   5.53%
RWR     Spdr Dj Wilshire Reit Etf                           6.58%    5.13%    7.60%    9.41%    9.64%    11.69%   13.89%   12.80%   16.45%   16.89%   22.50%   -10.77%  -14.67%  -3.38%
XLF     Spdr Select Sector Fund Financial                   7.54%    6.26%    7.63%    6.22%    8.65%    13.52%   16.12%   19.28%   22.65%   27.46%   16.94%   -9.10%   -2.39%   6.82%
XLRE    Real Estate Select Sector Spdr Fund The             5.74%    4.96%    7.44%    9.09%    9.14%    11.54%   12.89%   12.70%   13.28%   10.13%   15.34%   -7.06%   -12.96%  -0.91%
XLV     Spdr Select Sector Fund Health Care                 4.35%    2.93%    3.54%    1.89%    2.07%    0.87%    0.88%    1.98%    9.69%    19.53%   13.10%   -4.94%   -11.66%  -5.36%
XLU     Spdr Select Sector Fund Utilities                   3.94%    4.42%    6.28%    6.40%    7.17%    9.59%    10.37%   11.78%   25.92%   15.65%   28.91%   -3.16%   -6.62%   14.82%
XLP     Spdr Select Sector Fund Consumer Staples            3.88%    5.24%    6.13%    7.23%    7.10%    6.59%    6.85%    7.27%    3.29%    3.57%    9.16%    -0.81%   -4.59%   5.53%
        3-Months - Lowest 5                                 10.52%   7.35%    7.85%    7.63%    9.88%    15.34%   24.82%   29.36%   43.51%   49.94%   54.94%   -23.02%  -20.27%  -17.33%
        3-Months - Lowest 10                                9.41%    6.05%    7.16%    7.49%    9.61%    15.09%   22.99%   29.14%   44.24%   52.54%   58.76%   -18.98%  -17.29%  -12.81%
        3-Months - Highest 5                                5.09%    4.76%    6.20%    6.17%    6.83%    8.42%    9.42%    10.60%   14.97%   15.27%   16.69%   -5.01%   -7.64%   4.18%
        3-Months - Highest 10                               6.62%    5.45%    6.63%    6.80%    7.49%    10.44%   13.38%   15.85%   20.15%   21.98%   27.92%   -8.30%   -10.58%  -2.03%

So the ones to buy on 4/9/2025 were: XOP, XBI, XLK, XRT and XLY

This produced an average return of 54.94% over the next twelve months, while the ones that had done the best leading up to the bottom have an average return of 16.69%.

This has happened once again this year, though not nearly as pronounced. Why not? Because the drop leading up to the bottom in April 2025 was way more severe. The greater the severity, the greater the bounce that follows. It's simple math.

3/30/2026

Date:   3/30/2026                                           Forward  Forward  Forward  Forward  Forward  Forward  Forward  Forward  Past     Past     Past
Symbol  Sector                                              1-Day    3-Day    5-Day    7-Day    10-Day   1-Mth    2-Mths   3-Mths   3-Mths   6-Mths   12-Mths
XLK     Spdr Select Sector Fund Technology                  4.23%    6.66%    7.79%    11.43%   16.03%   25.10%   53.54%   49.60%   -12.31%  -9.64%   23.77%
XLF     Spdr Select Sector Fund Financial                   2.10%    2.43%    3.15%    6.14%    7.08%    7.80%    6.35%    11.25%   -12.22%  -10.54%  -1.42%
XLY     Spdr Select Sector Fund Consumer Discretionary      3.14%    2.35%    2.00%    6.70%    10.20%   12.01%   11.85%   11.22%   -12.21%  -11.99%  7.45%
XRT     State Street Spdr S&p Retail Etf                    2.69%    2.66%    3.63%    7.01%    6.71%    9.45%    6.32%    12.20%   -8.79%   -9.26%   14.53%
XLC     The Communication Services Select Sector Spdr Fund  2.68%    3.46%    3.58%    5.84%    7.97%    7.92%    7.09%    -0.51%   -8.68%   -9.03%   13.13%
XLV     Spdr Select Sector Fund Health Care                 1.94%    2.08%    1.91%    3.83%    3.48%    1.51%    2.79%    10.80%   -7.64%   2.89%    0.01%
KBE     State Street Spdr S&p Bank Etf                      2.51%    3.70%    4.92%    9.48%    9.05%    10.51%   7.65%    18.07%   -5.12%   -2.76%   11.44%
KRE     State Street Spdr S&p Regional Banking Etf          2.42%    3.76%    4.93%    9.80%    8.93%    9.80%    7.38%    18.36%   -2.80%   -0.09%   13.57%
XBI     State Street Spdr S&p Biotech Etf                   7.53%    8.57%    8.48%    10.98%   14.27%   10.57%   12.50%   33.36%   -2.47%   18.42%   40.64%
XLRE    Real Estate Select Sector Spdr Fund The             1.56%    3.49%    3.76%    6.27%    8.00%    10.41%   7.60%    10.46%   -1.46%   -5.39%   -2.15%
XME     State Street Spdr S&p Metals & Mining Etf           4.40%    7.07%    6.12%    8.94%    11.40%   14.76%   23.19%   3.42%    -1.22%   10.95%   83.06%
XLI     Spdr Select Sector Fund Industrial                  3.26%    4.57%    4.90%    9.95%    10.68%   11.47%   10.08%   18.56%   0.16%    1.30%    20.89%
RWR     State Street Spdr Dow Jones Reit Etf                1.38%    3.06%    3.33%    5.92%    7.73%    10.04%   8.06%    14.42%   0.33%    -1.56%   2.41%
XLP     Spdr Select Sector Fund Consumer Staples            0.11%    0.01%    -0.76%   1.91%    -0.50%   2.96%    0.17%    2.15%    4.65%    3.76%    2.52%
XLU     Spdr Select Sector Fund Utilities                   -0.07%   0.92%    0.77%    2.67%    1.18%    2.02%    -6.14%   -0.64%   6.96%    4.64%    18.62%
XLB     Materials Select Sector Spdr                        1.78%    2.68%    2.00%    5.25%    5.95%    4.85%    3.72%    3.93%    7.42%    9.15%    16.14%
XLE     Spdr Select Sector Fund Energy Select Sector        -1.14%   -4.37%   -2.91%   -7.48%   -9.70%   -3.74%   -7.53%   -13.67%  37.72%   37.72%   35.37%
XOP     State Street Spdr S&p Oil & Gas Exploration & Prod  -1.97%   -4.19%   -2.77%   -9.56%   -11.90%  -3.92%   -9.50%   -16.43%  45.43%   39.62%   43.03%
        3-Months - Lowest 5                                 2.97%    3.51%    4.03%    7.42%    9.60%    12.46%   17.03%   16.75%   -10.84%  -10.09%  11.49%
        3-Months - Lowest 10                                3.08%    3.92%    4.42%    7.75%    9.17%    10.51%   12.31%   17.48%   -7.37%   -3.74%   12.10%
        3-Months - Highest 5                                -0.26%   -0.99%   -0.73%   -1.44%   -2.99%   0.43%    -3.86%   -4.93%   20.44%   18.98%   23.14%
        3-Months - Highest 10                               1.68%    2.18%    2.29%    3.49%    3.71%    5.94%    4.22%    5.56%    9.75%    11.86%   26.05%

In this case the top five were: XLK, XLF, XLY, XRT and XLC.

The average return looking forward three months was 16.75%. This compares to an average drop of -4.93% for those that had done best leading up to the bottom on 3/30/2026.

Back in the 90s I tested this over a hundred years of history and found it to be consistently true. From then until now in out-of-sample real-time trading it has consistently done well. So yes, it is something worth paying attention to going forward.