Energy stocks (XLE) are up 60% in 2026. The S&P 500 (SPY) is up just over 11.5%.
But after looking at a 27-year chart this morning, I’m starting to wonder whether we’re witnessing something much bigger than one incredible year for energy.
Everyone’s still obsessing over the next big AI stock. Semiconductors, software, data centers. The same trades everyone’s been talking about for years.
Meanwhile, energy is absolutely crushing them.
The Leader is Energy
Take a look at the 2026 sector rankings.
Energy is outperforming the S&P 500 by 48% this year. Technology (XLK) has gained 25%.. while consumer discretionary and communications are actually negative.
I couldn’t care less whether social media thinks energy is exciting. It’s outperforming nearly everything else and that’s what matters to me.
But here’s where things get really interesting.
Could This Be Bigger Than 2026?
This is energy relative to the S&P 500 going all the way back to 1999.
After a massive run into 2008, energy spent more than a decade getting absolutely destroyed by the broader market. The ratio bottomed in 2020, rallied into 2022, and has spent the past several years consolidating.
Now look at the right side of that chart.
We’re seeing a broad, rounded formation with relative strength starting to turn higher again.
Could we be looking at the beginning of another secular period of energy outperformance?
I’m not ready to make that call just yet. But I’m sure as hell not ignoring a 27-year chart suggesting another major leadership shift while everyone else is busy chasing technology stocks.
And I already own energy stocks. They’re doing great. Is it time to buy (a lot) more?
What I’m watching: Whether XLE/SPY can reclaim its 2022–23 relative highs. That’s the confirmation I’d want before calling this a new secular leadership trend.
P.S. Anyone can look at energy after a 60% rally and pretend they saw it coming. That's hindsight, not an edge. Inside Hamilton's Power Shift, I'm doing the harder work: identifying the strongest stocks, developing actionable stock and options setups, and following the trades as they unfold. Opinions are free. The work is what matters. If you want to see how I'm identifying and managing those opportunities, take a look at Hamilton's Power Shift.
Hamilton
Founder, The Trading Initiative