This weekend brought several notable developments to the global marketplace as the United States moved to oust Venezuelan President Nicolás Maduro. It goes without saying that any uptick in geopolitical conflict leaves the door open for heightened volatility, and Venezuela’s position as a leader of global oil reserves makes the move particularly interesting. There are largely two trains of thought regarding the overall impact on oil/energy prices, which remained largely steady on Monday’s open (CL/ gained ~1% in the morning). The first is that heightened US influence could unlock more of Venezuela’s reserves, unleashing supply which would put downward pressure on energy prices. The second idea suggests that any unrest in energy driven regions could hamper near-term production, decreasing supply (and increasing uncertainty…) which would push overall prices higher. While the true outcome is likely somewhere in the middle, the weekend’s events gives us the opportunity to look around the globe to see how price is reacting in the near-term… and what you might monitor as the situation develops. Note that our commodity charts don't update with intraday action, so the chart below doesn't take into account movement on 1/5.

Energy names popped as markets opened for the day before tapering off throughout the morning. With that said, broad energy representative XLE managed to notch intraday highs above $47, enough to post a bullish catapult on its default chart. While the energy space remains a relative laggard on our longer-term rankings, its admittedly limited performance so far this year has been impressive (+~4.5% as of Monday morning). It’s long term fund score could certainly stand for some overall improvement as it sits as 2.73, but a trip above 3.0 would mark the fund’s first test of NDW’s “acceptable” status since March of 2025.

Chevron Corp (CVX) rallied on the news as the energy giant already has “significant” exposure to the country (CNBC). Shares advanced as much 6.5% for the day before trailing off slightly… but the move was enough to push it back into a positive trend to earn its third technical attribute point. While the stock will now be considered technically actionable, note that overall performance has been lackluster for the better part of the last three years. We will continue to monitor some stiff resistance in the low $170’s going forward.

Other areas typically associated with global unrest also moved higher on Monday. Silver and Gold continued higher after the space saw some relatively large swings to close out the last year. They continue to trade around their own respective highs and should continue to flex their muscles at the top of the rankings if further uncertainty is in store. Our last comment today will swirl around aerospace and defense names, a group which tends to excel during times of global unrest. The First Trust Indexx Aerospace & Defense ETF (MISL) gained roughly 3% with intraday action on Monday, having now gained just over 6% so far in 2026. While the move brings it up into heavily overbought territory, the technical picture remains quite strong. MISL was a recent addition to the Focus Five Model, which has put in a strong start to the new year. PPA is another focused aerospace and defense fund you could look toward.

Remember, any time there is a rapidly developing story, there will be headlines and an influx of calls from clients asking how they are positioned in the event things go haywire. Our job is to remain objective and let price be our guide. Utilize the charts to find levels of price that are important and set alerts to be notified as the full picture develops.

Momentum had a mixed performance across Q4, capping off what has been a mixed year for momentum. Large cap momentum strategies pulled back in Q4 after a productive Q3, lagging across the full year as many of those names were unable to make up the for the disruption early in the year. On the other hand, small cap momentum strategies flourished in the fourth quarter, with consistent small cap leadership serving as a tailwind for the space to close out 2025. 

The performance table below compares the price return of the Invesco Dorsey Wright Momentum ETF PDP and the Invesco Dorsey Wright SmallCap Momentum ETF DWAS to their respective benchmarks through the first three quarters, while the two bottom tables compare their YTD return against the same timeframe in prior years.

Our approach toward momentum through relative strength analysis looks to capitalize on consistent trends across the market. Changing trends cause the portfolios to readjust to maintain exposure to the strongest areas. Underperformance is typical during those environments as areas that had demonstrated relative strength fall in our rankings. The most important step in our approach comes next – those areas that have declined in strength are sold to make room for the new leaders. Any investment process is going to produce a portfolio of winners and losers. Relative strength analysis gives us a systematic way to cull the losers and constantly push the portfolio toward the strongest areas of the market.  

In the most recent quarter (Q3) we saw 50 changes (out of 100 holdings) in PDP and 111 changes (out of 200 holdings) in DWAS, repositioning both portfolios toward areas of leadership as we enter the second quarter. That is more than we saw last quarter, and even more than the quarters prior to that as market leadership continues to find steady footing. 

Below you'll find an update about the specific changes made in both strategies with the most recent index reconstitution. Keep in mind that removed positions likely no longer maintain characteristics of superior relative strength; meanwhile, additions have improved to a place of leadership and could be ideas to consider.

Invesco DWA Momentum ETF (PDP)

The stock-selection process behind the Invesco Dorsey Wright Momentum ETF (PDP) is simple yet robust. Every quarter, we apply the Relative Strength process to compare approximately 1,000 large and mid-cap US stocks and select the strongest 100 names. The quarterly reconstitution process's goal is to weed out the weak names and realign the portfolio toward strength. As mentioned before, with this most recent reconstitution and rebalance, we removed 50 stocks and added 50 new stocks, which we've compiled in the tables below. Several observations:

• Healthcare stocks were a major standout in the fourth quarter, resulting to the largest increase in allocation of any major sector.
• Technology also remained an area of focus, picking up even more allocation within the fund. Apple (AAPL) was among the most notable inclusions after its strong rally last quarter. 
• Industrials saw instability of leadership, with the fund simultaneously adding and removing twelve industrials stocks. However, the broader sector remains a point of emphasis. 
• For the second consecutive quarter, consumer cyclical stocks lost the largest percentage of allocation over the last quarter, with Autozone (AZO) being among the most notable removals. 
• Meanwhile, Financials and Utilities were the only two other sectors to lose allocation across the quarter.

Invesco DWA SmallCap Momentum ETF (DWAS)

The stock-selection process used in DWAS is like PDP. Every quarter, we apply the Relative Strength process to compare approximately 2,000 US-listed small-cap stocks and select the strongest 200 names. With this most recent reconstitution and rebalance we pushed the portfolio towards strength by removing 100 stocks and adding 100 new stocks, which we've outlined in the table below. However, and perhaps unique to DWAS, not all stocks that were removed are technically weak. We have received this question in the past, so we want to address it here.

One reason for these removals is due to stocks exceeding the market cap filter. High-momentum stocks should, ideally, increase in market cap which means that sometimes a name will exceed the small-cap maximum at the end of a quarter. This is not the norm, but worth keeping in mind when reviewing the changes. Several takeaways:

• For the second consecutive quarter, Healthcare names earned the largest additional percentage with the most recent change, adding nearly 20% additional allocation. 
• Basic materials was the only other sector to see an increase in allocation as mining companies continue to be an area of strength. 
• Financials also saw the largest decrease in allocation for the second quarter in a row, shedding 5.5% allocation as regional banks saw a muted Q4. 
• Industrials and consumer cyclicals also lost strength in Q4, with both sectors losing around 5% allocation within the fund.

Disclosures:

This article is intended for Financial Professional Use Only.

Management and other expenses can have a material impact on performance when compounded over time. Past performance, hypothetical or actual, does not guarantee future results. In all securities trading there is a potential for loss as well as profit. It should not be assumed that recommendations made in the future will be profitable or will equal the performance as shown.

Click here for more information from Invesco on the Invesco DWA Momentum ETF (PDP): https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=PDP

Click here for more information from Invesco on the Invesco DWA SmallCap Momentum ETF (DWAS): https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=ETF-DWAS

Dorsey, Wright & Associates, LLC is owned by Nasdaq, Inc. and we have affiliates who also provide financial services, research, information, and act as Brokers/Dealers to a wide variety of clients. Our affiliates use the information we create to create indexes, which are then used to create Exchange Traded Funds. These things create a potential conflict of interest in that we may have an incentive to promote or use the products and services of our affiliates and business partners. A number of Dorsey Wright representatives are registered with and hold securities licenses with the affiliate broker-dealers. In this capacity, they assist with the marketing and distribution of Exchange Traded Products.

Daily Option Ideas for January 5, 2026