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Offensive Technology Retains Its #1 Ranking Again This Week
Conclusion, Investment Implications, Strategy

The SEAF Model graphic below shows that offensive, “risk on” sectors Technology (XLK) and Consumer Discretionary (XLY) are currently the two top-ranked sectors according to SEAF.  Technology has actually been SEAF’s top-ranked sector for four of the past five weeks.   At the other end of the spectrum, defensive Health Care (XLV) and Consumer Staples (XLP) are among the worst-ranked sectors this week.  

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 Technology and Industrials in All time periods.
  • Money aggressively moving into Utilities in the Strategic time period.
  • Money aggressively moving out of  Energy and Financials 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.  This is where the money is currently going in the sector space.

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

SEAF Heat Map

SEAF Heat Map: 06-02-2025

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).

Technology: XLK

Economically sensitive Technology (XLK) is again the SEAF Model’s top-ranked sector this week with a Ranking score of 3, which is the best score possible.  Technology has actually been SEAF’s top-ranked sector for four of the past five weeks.  Chart 1 below shows that Technology moved back into top-three status according to SEAF on Apr 24th (upper panel) for the first time since Feb 20th, while coincidentally outperforming the S&P 500 (SPY, lower panel) by 5.0% during this period.  As long as Technology retains its current Favored status, recent outright strength and relative outperformance versus SPY are likely to continue.

Chart 1

Industrials: XLI

Economically sensitive Industrials is the SEAF Model’s second-ranked sector this week with a Ranking score of 8, up from an 11 ranking a week earlier.  This is the third consecutive week that Industrials has been one of the top three-ranked sectors according to SEAF, and has been on a Favored SEAF status since May 14th.  Meanwhile, the lower panel of Chart 2 below shows that XLI has coincidentally outperformed the benchmark S&P 500 (SPY) by 1.0%.  As long as Industrials remains Favored according to SEAF, recent relative outperformance by XLI versus SPY is likely to continue.

Chart 2

Consumer Discretionary (XLY)

Cyclical Consumer Discretionary is the SEAF Model’s third-ranked sector this week with a Ranking score of 12.  Consumer Discretionary has been moving in and out of the top-three-best SEAF Ranking scores since May 12th.  However, Chart 3 below shows that it has maintained its current Favored status since May 8th, outperforming the S&P 500 (SPY, lower panel) by 2.0% in the process.  As long as Consumer Discretionary retains its current Favored status, recent outright strength and relative outperformance by XLY versus SPY is likely to continue.

Chart 3