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
Markets Positioning For A Bearish Reversal?
Conclusion, Investment Implications, Strategy

The SEAF Model made a defensive shift last week, with Utilities (XLU) moving into the top-ranked spot and offensive Technology (XLK) dropping out of the top three for the first time since April 21st.  Moreover, from a very short-term Trading (weekly) perspective, defensive Health Care (XLV) has moved to a #1 ranking while offensive Technology has collapsed to a #11 ranking. These latest data suggest that, at least from a sector rotation standpoint, the market is positioning itself for an overdue corrective decline.

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 defensive Utilities in All time periods.
  • Money aggressively moving into defensive Health Care in the Trading time period.
  • Money aggressively moving out of offensive Technology in the Trading time period.
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 indicate a multi-timeframe trend of asset outflows from the Health Care sector.  This is where the money is coming from.

SEAF Heat Map

SEAF Heat Map: 07-28-2025

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).

Utilities (XLU)

Defensive Utilities (XLU) is the SEAF Model’s top-ranked sector this week with a Ranking score of 10.  The rightmost green highlights in the upper panel of Chart 1 below show that Utilities most recently moved back into favored status on Jly 9th, while the lower panel shows that XLU has slightly outperformed the benchmark S&P 500 (SPY) since then.  The green highlights in the middle of the chart show that earlier this year, the period between Feb 6th and May 9th, coincided with 9% of relative outperformance by XLU versus SPY.  As long as Utilities retains its current Favored status, XLU is likely to outperform the benchmark S&P 500 (SPY) in the upcoming weeks.

Chart 1

Industrials  (XLI)

Economically sensitive Industrials (XLI) is the SEAF Model’s third-ranked sector this week with a Ranking score of 12.  The upper panel of Chart 2 below shows that Industrials most recently moved back into Favored status according to SEAF on Jun 24th.  The lower panel shows that XLU has coincidentally outperformed the benchmark S&P 500 (SPY) by 3% since then.  As long as Industrials retains its current Favored status, recent relative outperformance by XLI versus SPY is likely to continue.

Chart 2

Technology: XLK

Economically sensitive Technology (XLK) dropped out of the SEAF Model’s top-three ranked sectors this week for the first time since Apr 21st, moving down to #4 with a Ranking score of 13 — but still maintaining Favored status as shown in the upper panel of Chart 3 below.  The lower panel shows that XLK has outperformed the S&P 500 (SPY) by 14% during this period.  Even though Technology has dropped out of the top three according to SEAF, as long as it retains its current Favored status, recent relative outperformance by XLK versus SPY is likely to continue.

Chart 3