NEW! Weekly-updated PDF of all SEAF Rainbow Charts:  Click the link below to download a PDF of this new addition to our research services.

Click Here For This Week’s  SEAF Model “Rainbow Charts” Update
Health Care Leads, Tech Bleeds
Conclusion, Investment Implications, Strategy

Financials (XLF) and Communication Services (XLC) retain their previous weeks’ status as top-three-ranked sectors according to SEAF while adding defensive Health Care (XLV) to the list.  XLF has been one of the top-three-ranked sectors according to SEAF for 6 of the past 7 weeks, and XLC has been one of the top three for 8 of the past 9 weeks.  At the other end of the spectrum, investor assets are most aggressively moving out of  Consumer Discretionary (XLY) 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 Financials and Communication Services in the All time periods.
  • Money aggressively moving into Health Care in the Trading time period.
  • Money aggressively moving out of  Consumer Discretionary and Energy 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 Consumer Discretionary.  This is where the money is coming from.

NEW! SEAF Heat Map

SEAF Heat Map: 02-28-2025

The SEAF Heat Map provides additional insight into the flows of the 11 Sector ETFs. Each time frame is independent, meaning the color spectrum for one period does not affect another. For example, the strongest inflow (dark green) for the trading week is separate from the strongest inflow for the tactical month.

The heat map visually represents the spectrum of inflows and outflows, with green indicating inflows and red indicating outflows. The more extreme the flow, the darker the corresponding color—deep green for strong inflows and deep red for strong outflows. Flows closer to yellow indicate minimal percentage change.

This tool serves as an additional layer of information to help investors not only identify where sector flows are moving but also gauge the relative strength of those flows compared to their peers.

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).

Financials: XLF

Cyclical Financials (XLF) is again the SEAF Model’s top-ranked sector this week with a Ranking score of 5.  Financials have been one of the top three top-ranked sectors according to SEAF for 6 of the past 7 weeks. The green highlights in Chart 1 below show that Financials moved back into Favored status on Jan 14th and has remained there since (upper panel), while XLF has coincidentally outperformed the benchmark S&P 500 (SPY, lower panel) by 8%.  Expanding investor assets fuel outright price advances and relative outperformance versus the benchmark. 

Chart 1

Communication Services: XLC

Economically sensitive Communication Services (XLC) is the SEAF Model’s second-ranked sector this week with a Ranking score of 8.  Financials have been one of the three top-ranked sectors according to SEAF for 8 of the past 9 weeks, dating back to the beginning of the year.  The green highlights in the upper panel of Chart 2 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 6% during this period.  As long as Communication Services remains Favored by SEAF, XLC is likely to continue outperforming SPY.

Chart 2

Health Care (XLV)

Defensive Health Care (XLV) is the SEAF Model’s third-best-ranked sector this week with a Ranking score of 10, its highest Ranking score since September 2024.  After being one of the three weakest sectors according to SEAF for 6 of the past 8 weeks, the green highlights in the upper panel of Chart 3 below show Health Care moved into Favored territory on Feb 25th.  The lower panel shows that XLV has already outperformed the benchmark S&P 500 by 7% since bottoming out in Avoid status on Feb 18th.  The recent rush of investor assets into XLV, which ranked #1 in the Trading time frame last week, represents an aggressive move toward defensive positioning by the market.

Chart 3