Commodities have continued to see shifts in leadership through 2026. After beginning the year with precious metals carrying the leadership baton, industrial metals spent a brief period as the top commodity in February before energy raced out to take the top spot in early March. While the energy space continues to garner the headlines, industrial metals overtook energy for the top spot within the NDW DALI Commodity rankings to close out the month of May. Though the focus is often on leadership and participation in those trends, monitoring action within laggard areas is equally as important for portfolio allocation.

The major industrial commodity, copper, has been the primary driver in the sub-asset’s recent ascension. Back in early May, an article in Daily Equity Report noted the relative gain the United States Copper Index Fund (CPER) against the SPDR Gold Trust (GLD). Since then, CPER gave a second buy signal and flipped the trend back to positive on the default point and figure trend chart as the fund rallied to a new chart high at $40.50 by mid-May.  The push to highs and maintaining near those highs to cap off May led to CPER showing positive long-term relative strength against the likes of oil representative Invesco DB Oil Fund (DBO). After matching the chart high early last week to kick off June, Friday’s (6/5) trading brought the trend chart back into Os, towards the middle of the 10-week trading, and actionable territory.

As mentioned, maintaining exposure to leadership like copper within a commodity’s sleeve and understanding the implications of long-term strength from the industrial metals space can help guide a portfolio elsewhere in other assets. Additionally, understanding weakness within laggard areas can have similar effects. While inflation protection, among other factors, saw the SPDR Gold Trust (GLD) push higher the past two years, action in 2026 has seen the commodity consolidate. After a brief rally in the latter part of March and early April saw a couple buy signals given on the trend chart, GLD returned to a sell signal in mid-April before giving additional sell signals. Friday’s (6/5) trading culminated in GLD giving a third sell signal as the fund tested long-term support at $400 before seeing intraday action Tuesday violate that support GLD fell to $390 on the chart. Support can be found in the $365 and $370 range before getting down to support in the lower $300 range. While a tactical portfolio may be avoiding or underweighting precious metals portfolio, continued weakness from the space – like continued strength from industrial metals – can have notable implications on potential portfolio allocations in other assets.

There has been plenty of talk about inflation over the last few years. That conversation has had its moments of being hot or cold, but recently it’s been hot as oil prices rose significantly following the start of the Iranian conflict. Headline inflation has ticked up; however, the housing market has cooled off. According to Zillow’s Observed Rent Index (ZORI), YoY rental rate growth has been less than 2% for four consecutive months. Over the last twenty years, there have been only four other periods when YoY % in ZORI was less than 2% for four consecutive months: 2020, 2014-2015, and 2009-2012. The 2020 covid environment was due to the exogenous circumstances of the period rather than underlying weakness in the housing market like the other two periods. Nonetheless, this is the weakest housing market we’ve seen in terms of rental rate growth in over a decade and is not supportive of higher inflation once/if oil prices begin to come down.

The price action in homebuilder stocks suggests the market has been anticipating shrinking margins for some time. The State Street SPDR S&P Homebuilders ETF (XHB) has not made a new all-time high since November 2024 and underperformed the S&P 500 by over 40% since then. XHB has rallied back to its negative trend line, but the technical picture is overwhelmingly weak. With both builder price action and rental rate growth in a poor state, the backdrop for the housing market is not conducive to higher inflation from that section of the market.

The immediate takeaway from this information is that homebuilders should generally be avoided for now. If we look at a comparison between YoY % changes in the Zillow Observed Rent Index and Headline CPI they are usually correlated. Headline CPI is a bit more volatile as things like food and energy, but historically tracks well with rental rate growth at least directionally. The divergence between the two recently is clear on the chart below as rental rate growth has headed lower for over a year now. Headline CPI was tracking along with rental rate growth for most of the last year until the recent oil price shock. If or when we get a resolution of that conflict, it can be expected that headline CPI will begin to track back down to where rental rate growth has been heading. This would open up interesting opportunities on the fixed income side which has been an out of favor asset class for some time. While it will not compete with equities until there’s some relative strength, there could be more viable use cases for fixed income in the near future.

The option suggestions featured here are pulled from the NDW Options Ideas tool. These are just a sample of the ideas that can be found there. The Options Idea tool contains numerous additional income and speculative plays. It also offers relative strength-based screens targeting the highest (and lowest) relative strength stocks and ETFs that have recently moved counter to their longer-term trend. To access or subscribe to the Options Ideas tool click here.

Call

The TJX Companies (TJX) September 18 $160 Call

Put

Honeywell International Inc (HON) September 18 $220 Put

Income (Short Put)

Citigroup, Inc. (C) July 10 $131 Put