Energy leads as commodities enter the expansion phase
By Sam Gatlin, Jason Perz
January 30, 2026
The metals market just reminded everyone why commodities are not for the faint of heart.
Today was ugly. Brutal, even.
Gold futures closed the session down more than 11%.
Palladium futures were off over 15%.
Platinum futures collapsed nearly 19%.
And Silver futures? Down more than 31% in a single day.
The selling pressure was relentless, emotional, and indiscriminate.
But under the surface, we're seeing major rotation in the commodities complex. As the legendary market technician and co-founder of the CMT Association, Ralph Acampora said, "Sector rotation is the lifeblood of a bull market."
While the tape in precious metals was getting torn to shreds, the broader message from the commodities market hasn’t changed. In fact, it’s becoming clearer by the day.
This is not the end of the commodities bull market; it’s the next phase.
Back in late December, we laid out the roadmap for this next phase.
After rallying by more than 110% from the COVID lows in just two years, our equal-weight basket of commodities was pressing up against the upper bound of a massive, multi-year accumulation pattern.
For years, leadership was narrow. Precious metals did all the heavy lifting.
Gold, Silver, Platinum, and Palladium carried the torch while most other commodity groups lagged behind.
Our view then was simple: 2026 would be about expansion.
That expansion is now underway.
If we start with the performance leaderboard for the first month of 2026, the rotation couldn’t be clearer.
Energy $XLE is the top-performing sector by a wide margin.
Agribusiness $MOO is right behind it.
And Global Natural Resources $GNR, Broad Commodities $DBC, and Materials $XLB round out the top performers.
Five of the strongest areas to start the year all sit squarely in the real-asset, inflation-sensitive corner of the market.
On the other side of the ledger, some of the largest and most crowded sectors in the S&P 500 are struggling.
Financials $XLF, Technology $XLK, and Healthcare $XLV all closed the month lower.
However, money isn’t leaving equities altogether; it’s rotating from financial assets to hard assets.
That message becomes even clearer when we zoom out and compare commodities to stocks.
The Bloomberg Commodity Index $DJP relative to the Dow Jones Industrial Average $DJI has spent the past several years carving out a textbook bearish-to-bullish reversal pattern.
Now the resolution is here.
This key intermarket ratio is breaking higher, confirming that the outperformance we saw in January is not a one-month wonder. It’s the early innings of a much larger regime shift.
Commodities don’t just outperform stocks for a few weeks and call it a cycle. When these relative trends turn, they tend to persist.
And if commodities are going to lead, energy is going to lead commodities.
Right now, we're seeing energy take on a brand-new leadership role versus the broader market.
The equal-weight Energy ETF $RSPG relative to the equal-weight S&P 500 $RSP spent much of the past year digesting gains, working off excesses, and building a base.
That consolidation is now resolving higher.
The key intermarket ratio just broke out to new multi-month highs, signaling the beginning of a brand-new primary uptrend.
Zooming in only strengthens the case.
Over the past year, this ratio carved out a clean bearish-to-bullish reversal pattern and ripped to its highest level since April of last year.
This isn’t a mean-reversion bounce. It’s a trend change.
Energy is reasserting itself as a leader.
Which brings us to the trade.
The S&P 500 Energy Sector $XLE has gone nowhere since the Great Financial Crisis.
However, it closed January at a brand-new all-time high. This is the resolution we've been waiting decades for.
And we don't think this new uptrend will last for a few quarters. We expect it to last for years.
We want to own XLE above 51, with a target of 75 over the next 6-12 months.
Energy - Commercial hedgers added nearly 7,000 contracts to one of their largest net-long positions in Brent Crude Oil ever. This is the smart money telling us that energy is cheap down here, and the risk is skewed to the upside.
Fixed income - Commercials added nearly 26,000 contracts to one of their largest net-short US 30-Year Treasury Bond positions ever. This is a bet on higher interest rates, which will benefit inflationary assets like energy.
Precious metals - After recently flipping net-short, commercial hedgers took a break from shorting Palladium. The bulls want to see them resume shorting it.
For those looking to make the most amount of money possible from this rotation into energy, the Commodities Trade of the Week highlights two of our favorite setups in the sector.
Premium members can see the entry and target levels below. 👇
You need to have a subscription to access this content in full.
Log in or subscribe today to unlock new features and receive Member Benefits.
