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Click Here For This Week’s  SEAF Model “Rainbow Charts” Update
Can Technology (XLK) Ignite The Next Market Rally?
Conclusion, Investment Implications, Strategy

Communication Services (XLC) has once again retained a top-three ranking according to the SEAF Model while Technology (XLK) and Utilities (XLU) moved into top-three status.  XLC has maintained a top three SEAF ranking for 7 of the 8 weeks thus far in 2025 while simultaneously outperforming the benchmark S&P 500 (SPY) by 4.8%, making it the best-performing sector thus far this year.  At the other end of the spectrum, SEAF shows that investor assets are aggressively moving out of Health Care (XLV) and Energy (XLE).

Beyond The SEAF Model Video: This Week’s Sector Themes

This weekly video by Jack Kosar goes into more detail on the latest SEAF Model data via a heat map that provides more detail on where sector-related assets are going, and where they are leaving, in the 11 Sector SPDR ETFs.  Jack also displays and discusses our SEAF “Rainbow Charts” which highlight SEAF’s past 12 months of Favored, Neutral, or Avoid rankings. 

From The Video: This Week’s Major Themes
  • Money continues to aggressively move into Communication Services in All time periods.
  • Money starting to move back into Technology in the Trading and Strategic time periods.
  • Money aggressively moving out of Health Care in All time periods.
The SEAF Model: Current Signals & Related Performance

Editor’s Note:  These are the latest specific trading signals generated by our SEAF Model, which also includes a rules-based money management component.  The backtested performance data below is based on trading a predetermined amount of assets with an equal allocation of those assets across the top three Rankings.  The model is updated once per week, on the weekend, and any rebalancing takes place on the market opening the following Monday morning.  This is the recommended way to invest via the SEAF Model.  Contact us for any additional clarification.S

In the SEAF Model Graphic below, the Ranking column sorts the entire table of 11 sector ETFs according to the sum of rankings in the Trading (weekly), Tactical (monthly), and Strategic (quarterly) categories, from largest inflows to largest outflows.  The premise of the model is to invest in the sectors that the money is going into and to avoid the sectors the money is coming out of.  

The lower the Ranking number, the stronger the trend of asset flows going into that sector.  The top two sectors in each category, according to a positive change in inflows, are highlighted in green.  The top two sectors in each category, according to a negative change in outflows, are highlighted in red.

Click the table to make it larger

The latest data indicate a multi-timeframe trend of asset inflows into Communication Services and Financials.  This is where the money is currently going in the sector space.

The latest data also indicate a multi-timeframe trend of asset outflows out of Energy and Health Care.  This is where the money is coming from.

SEAF Model Individual Sector Charts (“Rainbow Charts”)

The charts below display the weekly SEAF Model Ranking Scores over the previous 12 months for the strongest and weakest sectors through September 12th.  The line in the upper panel displays these weekly scores within the context of being Favored (3-15, green), Neutral (16-24, yellow), or Avoid (25-33, red) and also displays the trend of asset flows as the money moves in and out of these sectors.  The lower panel plots the corresponding weekly relative performance chart of that particular sector versus the S&P 500 (SPY).

Communication Services: XLC

Economically sensitive Communication Services (XLC) is again the SEAF Model’s top-ranked sector this week with a Ranking score of 6.  The green highlights in the upper panel of Chart 1 below show that Communication Services initially moved into Favored status on Jan 21st and, with the exception of Feb 11th, has remained there since.  The lower panel shows that XLC has coincidentally outperformed the benchmark S&P 500 (SPY) by 5% during this.  As long as Communication Services remains Favored by SEAF, XLC is likely to continue outperforming SPY.

Chart 1

Technology (XLK)

Economically sensitive Technology (XLK) is the SEAF Model’s second-ranked sector this week with a Ranking score of 12.  Technology is also the top-ranked sector in the Trading time frame, which means it received the most aggressive inflow of new money over the previous week.  The green highlights in the upper panel of Chart 2 below show that Technology very recently moved to Favored status, on Feb 13th, as XLK has coincidentally outperformed the benchmark S&P 500 (lower panel) as these asset flows improved.  As long as Technology maintains its Favored status, as it most recently did between Dec 4th and Jan 10th, recent relative outperformance by Technology is likely to continue.

Chart 2

Utilities: XLU

Defensive Utilities (XLU) is the SEAF Model’s third-ranked sector this week with a Ranking score of 13.  The rightmost green highlights in the upper panel of Chart 3 below show that Utilities moved back into Favored status on Feb 7th, after spending most of its time as a Favored sector between May and October of last year.  The green highlights in the middle of the chart show that Utilities’ favored status between Jly 18th and Oct 9th coincided with 11% of relative outperformance by XLU versus the benchmark S&P 500 (SPY) as investor assets aggressively moved into that sector.

Chart 3