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Click Here For This Week’s  SEAF Model “Rainbow Charts” Update
Market Sectors Aggressively Positioned For More Weakness
Conclusion, Investment Implications, Strategy

The SEAF Model’s top-three ranked sectors this week are all defensive in nature: Utilities (XLU), Health Care (XLV), and Energy (XLE).  Defensive sectors are characterized by companies whose products and services are considered necessities, meaning people continue to need them regardless of economic conditions.  At the other end of the spectrum, the three worst-ranked sectors according to SEAF — Technology (XLK), Consumer Discretionary (XLY), and Communication Services (XLC) — are all seen as cyclical and offensive in nature as they are susceptible to changes in consumer spending.  So, at both ends of the spectrum, the SEAF Model is indicating aggressive positioning for more US stock market weakness. 

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 aggressively moving into Utilities in All time periods.
  • Money aggressively moving into Energy in the Trading and Tactical time periods.
  • Money continues to aggressively move out of  Technology 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.

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 Health Care and Energy.  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 Technology and Consumer Discretionary.  This is where the money is coming from.

NEW! SEAF Heat Map

SEAF Heat Map: 03-14-2025

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).

Utilities: XLU

Defensive Utilities (XLU) is the SEAF Model’s top-ranked sector this week with a Ranking score of 8, rising from a 5th best ranking a week earlier.  The green highlights in the upper panel of Chart 1 below shows that Utilities initially moved into Favored status on Feb 7th and, with the exception of just a few one-day dips into Neutral (yellow) status in late February, has remained there since.  The lower panel shows that XLU has coincidentally outperformed the benchmark S&P 500 (SPY) by 9% as these expanding investor assets have helped drive the price of the ETF higher.  The recent rush of investor assets into XLU represents an aggressive move toward defensive positioning by the market. 

Chart 1

Health Care (XLV)

Defensive Health Care (XLV) is the SEAF Model’s second-best-ranked sector this week with a Ranking score of 9 and has been one of the top-three-ranked sectors for the past three weeks.  The upper panel of Chart 1 below shows that Health Care initially moved into Favored territory on Feb 25th.  The lower panel shows that XLV has coincidentally outperformed the benchmark S&P 500 by 4% since then.  Like Utilities, the recent rush of investor assets into XLV represents an aggressive move toward defensive positioning by the market.

Chart 2

Technology: XLK

Economically sensitive Technology (XLK) is the SEAF Model’s worst-ranked sector this week with a Ranking score of 31 and has been one of the three worst-ranked sectors for the past three weeks.  The green highlights in the upper panel of Chart 3 below show that Technology initially moved into Avoid status on Feb 25th.  The lower panel shows that XLK has coincidentally underperformed the benchmark S&P 500 (SPY) by 2% during this period.  Note that the recent relative weakness in Technology and coincident relative strength in Utilities and Health Care are all indications of a defensive internal shift by the market.

Chart 3