Trading Signal: May 2026
Revealing the two ETF allocations for the systematic MarketFighter strategy in May.
It’s time for the monthly allocation update of our strategy. The system has now calculated the relative momentum data, and the two selections for May are ready.
A huge welcome to the 286 new subscribers who joined since last month. Great to have you all here!
Before the first market opening of each month, I send out the trading signal provided by my systematic monthly rotation strategy. The signal tells us which two ETFs the system will invest in for the coming month. This system has outperformed the market in 25 of the past 26 years.
If you’re just here for the signal, feel free to scroll down to find it! 👇
New to The MarketFighter Strategy?
I write about a simple approach to beat the stock market with only 15 minutes of monthly work that anyone can copy. Check out these links:
➡️ The quick introduction
➡️ The detailed breakdown of the strategy
April was a phenomenal month for stocks
The global stock markets rebounded sharply in April, following a tough decline in March as a result of the Iran conflict and the spiking oil prices.
I will publish a full performance report early next week with the details of how the MarketFighter Strategy performed in April compared to the market.
I can already see from the numbers, though, that we are still comfortably ahead of market returns year-to-date. However, we lagged the surging market benchmarks in April due to the energy sector position, which retreated a bit after staggering returns in March.
The May 2026 Signal
For the coming month of May 2026, the MarketFighter Strategy will continue with an unchanged allocation compared to April. This means it will still be holding these two positions, equally weighted:
THE FACTOR ALLOCATION (50%):
▶️ USA Value
THE SECTOR ALLOCATION (50%):
▶️ Energy Sector
The price data shows that despite the heavy movements in April, the long-term momentum trend still indicates a high probability of excess returns in US Value and Energy going into the next 30 days.
US investors can implement the signal with these ETFs:
✅ VLUE ticker (ISIN: US46432F3881)
✅ XLE ticker (ISIN: US81369Y5069)
European investors can implement the signal with these ETFs:
✅ QDVI ticker (ISIN: IE00BD1F4M44)
✅ QDVF ticker (ISIN: IE00B42NKQ00)
Be aware that the European listed ticker names vary from one exchange to another. I have listed the Xetra (German) tickers, but they have different names on the London exchange, for instance. Let me know in the comments if this causes any confusion.
➡️ See the full list of relevant ETF ticker names for the strategy here.
Rebalancing the positions
For new investors who joined since last month, it’s easy if you want to follow the strategy: Simply buy 50% of each of the ETFs listed above.
For existing investors, it’s even easier this month, as you don’t have to change anything! This happens when the two allocations from last month are still the strongest sectors and factors now, based on the relative momentum calculations we run at the end of every month.
There is, however, an option to rebalance if your two ETFs have grown far away from the 50/50 allocation. The strategy was developed and back-tested using a strict 50/50 allocation each month, but if your trading fees are high, don’t worry. Personally, I don’t rebalance unless the distribution drifts beyond 55/45 in either direction.
How many trades can be expected?
One thing I haven’t addressed is the number of trades this system can be expected to require. As with everything in investing, it’s impossible to predict the future. The best we can do is look at the history. Here’s what it says:
The average number of annual trades for the factor allocation over the past 26 years was 5.0 (changes from one factor to another). For the sector allocation, the corresponding number was 4.1. This amounts to a total average of 9.1 changes of allocations annually.
Why am I telling you these numbers? To let you know that a month with no changes to the allocations is not uncommon for this system. I intentionally designed it to keep transaction costs as low as possible, not trading more than needed.
Don’t forget to subscribe for more information on the MarketFighter Strategy and for future trading signals.
Thanks for reading!
Disclaimer: The MarketFighter Strategy is for educational and informational purposes only. It is not financial advice, and the author is not a licensed investment advisor. Investing in ETFs involves significant risk, and past performance is never a guarantee of future results. You are solely responsible for your own trades and financial outcomes. Read the full Disclaimer here.