What a wild couple of weeks it’s been…

Volatilty has been front and center, with renewed trade war fears sending stocks plummeting.

Oct. 10 was pure mayhem. The S&P 500 shed 2.7%… the worst session since the Liberation day crash six months ago.

But that was nothing compared to what we saw in a key area of the financial sector.

Headlines sprung up about sour loan bets made by regional banks, many tied to the collpase of auto lender Tricolor Holdings and car parts supplier First Brands. In response, the SPDR S&P Regional Banking ETF fell 10% the last month.

And as you’d imagine, when Wall Street sniffs out “cockroaches” – as JP Morgan CEO Jamie Dimon put it – they sell first and ask questions later.

The banking worries spread to the whole financials sector. And now, the group has fallen below a widely followed benchmark.

But as you’ll see today, there’s opportunity in the beaten-down financials sector.

Two titans have fallen hard… but both are setting up for double-digit returns in the coming months.

2 Oversold Opportunities for October 2025

The S&P 500 dropped hard on Oct. 10, falling 2.7%. That’s the largest decline since the April bottom.

This notable drawdown brought down just about all stocks… including financials.

The Financial Select SPDR Fund (XLF) has now dropped below its 50-day moving average (orange line below), which you can see here:

This basket of stocks is home to many of the biggest financial firms on the planet, including JPMorgan Chase (JPM) and Berkshire Hathaway (BRK-B).

The fund also holds insurers, credit card companies, exchanges, and financial data firms.

The latter subgroup is where we’ll spot the opportunity.

When capitulation hits a group of stocks, it pays to sift out the high-quality names with the best forward setup.

The first oversold opportunity in Intercontinental Exchange (ICE), which owns and operates exchanges, fixed income, and mortgage technology solutions.

The company has been expanding and innovating for over two decades. In 2007, they purchased the New York Board of Trade to handle commodities clearing. And in 2013, they acquired the NYSE’s Euronext to expand their futures business.

These acquisitions have helped ICE generate phenomenal EPS growth. In fact, from 2006-2024, earnings have grown at 13% a year.

But even with this rich history, the stock has come under a lot of pressure. Shares have suffered a 13% drop in the last two months alone. That has it down at $153 per share, just above its April lows:

Normally you don’t want to catch a falling knife. However, when the evidence suggests a rebound is near, take the bet.

Back to 2005, ICE shares have fallen 13% or more in a two-month span 338 times.

Two months later, the stock gains an average of 8.6% with a positive hit ratio of 68%:

Nearly a 70% win ratio is a good setup if you ask me!

The second oversold financial stock I want to look at is S&P Global (SPGI).

I’m sure everyone reading this has heard of the S&P 500… that’s the de facto benchmark for equities.

S&P Global not only supplies benchmarks, but they also offer analytics and data to capital markets.

The company did just over $14.2 billion in sales last year, which is expected to climb to $15.2 billion this year.

Net income in 2024 ramped to $3.8 billion and is estimated to reach $4.6 billion in 2025.

So what we have is a growing company that’s trading on a sudden discount. SPGI shares have fallen 14% over the last two months to $473 per share:

Like ICE, these prices are near six-month lows.

But as extreme as it might seem, this price action isn’t all that uncommon. Since 1985, SPGI shares have fallen 14% or greater in a 42-day period 479 times. That’s a wide sample set.

One month and two months later, shares gain on average 4.8% and 7.9%, respectively. Both have a positive hit ratio of 65%:

These are the types of hidden opportunities that most are overlooking.

Don’t just stare at financial names falling day after day.

Look for the opportunity.

That’s where TradeSmith helps the average investor.

By utilizing state-of-the-art software, we can spot rare anomalies and get a data-driven outlook to outperform.

That’s how you win.

Financial stocks are oversold… and history says you should use that as an opportunity.

Regards,

Lucas Downey

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Source: Trade Smith