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Offensive Tech, Comm Services Maintain Top Rankings For 3rd Week
Conclusion, Investment Implications, Strategy

The SEAF Model graphic below shows that offensive, “risk on” sectors Technology (XLK) and Communication Services (XLC) have maintained a top-three ranking for the third consecutive week.  New to the top three this week is defensive Utilities, which has been flip-flopping back and forth with cyclical Real Estate for one of the top three SEAF rankings since April 14th.  At the other end of the spectrum, Energy (XLE) and Health Care (XLV) are, for the third consecutive week, the two weakest sectors according to SEAF.

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” highlighting SEAF’s past 12 months of Favored, Neutral, or Avoid rankings. 

From The Video: This Week’s Major Themes
  • Money aggressively moving into Communication Services in All time periods.
  • Money aggressively moving into Technology and Consumer Discretionary in the Trading and Tactical time periods.
  • Money continues to aggressively move out of  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.

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 where the money is going and to avoid the sectors where the money is coming out.  

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 Technology and Communication Services.  This is where the money is currently going in the sector space.

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

SEAF Heat Map

SEAF Heat Map: May 12, 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).

Economically sensitive Communication Services is the SEAF Model’s top-ranked sector this week with a Ranking score of 8, equalling its score of a week ago.  Communication Services moved back into top-three status according to the SEAF Model on Apr 24th, for the first time since Mar 6th, and has remained there since.  XLC has coincidentally been a relative performer versus the S&P 500 (SPY) during this same period (lower panel).  Year-to-date, Communication Services has been the sixth-strongest sector on an outright basis while outperforming the S&P 500 (SPY) by 4.2%.  The longer that XLC retains its current Favored status, the more likely that it will be accompanied by relative outperformance versus SPY.

Chart 1

Technology: XLK

Economically sensitive Technology (XLK) is the SEAF Model’s second-best-ranked sector this week with a Ranking score of 9.  Technology jumped back into top-three status according to the SEAF Model on Apr 24th, for the first time since Feb 20th, and has maintained that status again this week.  A closer look at Chart 2 below shows that XLK has coincidentally outperformed the S&P 500 (SPY) by 4.0% during this period.  More broadly, Technology has been oscillating back and forth between Favored and Avoid status for most of the past year (upper panel), which is why XLK has generally been sideways to weaker versus the S&P 500 (SPY, lower panel) during this larger time frame.  It would take a sustained stay in Favored status to fuel an extended period of relative outperformance by Technology versus the broad market.

Chart 2

Utilities (XLU)

Defensive Utilities is the SEAF Model’s third-ranked sector this week with a Ranking score of 13.  Utilities has been one of the top-four-ranked sectors according to SEAF for the past nine weeks beginning on Mar 17th.  As a result, through the end of last week, XLU has been the best-performing Select Sector SPDR ETF year to date, rising 6.0% outright while outperforming the S&P 500 (SPY) by 9.8%.  The green highlights in the upper panel of Chart 3 below show that Utilities initially moved into Favored territory on Feb 7th (upper panel) and, with the exception of a few quick moves in and out of Neutral status, has remained there since.  The lower panel shows that XLU has coincidentally outperformed the S&P 500 (SPY) by 10%.

Chart 3