Industrials, Technology Continue To Attract Investor Assets 

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

Conclusion, Investment Implications, Strategy

This week, defensive Health Care (XLV) drops out of the top-three-ranked sectors according to SEAF for the first time since Oct 27th, while outperforming the S&P 500 (SPYM) by 5.0%.  It has been replaced by economically sensitive Energy (XLE), which has remained out of Favored status from early April to early November while underperforming the benchmark S&P 500 (SPY) by 19.0%.  Meanwhile, economically sensitive Industrials (XLI) and Technology (XLK) retain the previous week’s status as the second and third-best-ranked sectors.  At the other end of the spectrum, cyclical Financials (XLF) is the worst-ranked sector and the only one in Avoid status this week.  Financials has been one of the three weakest sectors according to SEAF since Sep 29th and has coincidentally underperformed the S&P 500 (SPYM) by 4.0%. 

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 our SEAF Rainbow Charts and a heat map that provides more color and detail on where sector-related assets are going and where they are coming from across the 11 Sector SPDR ETFs, which together comprise the S&P 500.   Our Rainbow Charts highlight SEAF’s previous 12 months of Favored, Neutral, and Avoid rankings. 

From The Video: This Week’s Major Themes
  • Money is aggressively moving into Energy and Industrials in All time periods.
  • Money is aggressively moving into Technology in the Trading and Strategic time periods (same as the previous week).
  • Money is aggressively moving out of 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.

Data through 12-5-2025. Click the table above to enlarge

The latest data again indicate a multi-timeframe trend of asset inflows into the Health Care and Technology sectors.  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 Financials sector.  This is where the money is coming from.

SEAF Heat Map

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 October 16th.  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).

Health Care (XLV)

Economically sensitive Energy is the SEAF Model’s top-ranked sector this week, with a Ranking score of 10.  This is on the lower end of Favored status, which is a cumulative score of 3-15, indicating a relatively weak signal.  The rightmost green highlights in the upper panel of the chart show that Energy edged back into Favored status on Dec 3rd, following three earlier failed attempts to achieve and maintain a sustained Favored status in mid-January, during March, and in mid-November.  Also note that all three prior short-lived moves into Favored status were accompanied by relative outperformance by XLE versus the benchmark S&P 500 (lower panel).  Year-to-date, according to ssga.com, Energy is the seventh-best/fifth-worst-performing Sector SPDR ETF, rising by 7.2% while underperforming State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 9.8%. 

Chart 1

Industrials (XLI)

Economically sensitive Industrials (XLI) is the SEAF Model’s second-ranked sector this week, with a Ranking score of 10, from 14 a week earlier.  The upper panel of the chart shows that this is the latest in a string of several previous (failed) attempts to make a sustained move into Favored status since late August.  The prior sustained move into Favored status took place between Jun 24th and August 8th, and coincided with a period of relative outperformance by XLI versus the benchmark S&P 500, as indicated by the green arrow in the lower panel.  Year-to-date (YTD), according to ssga.com, XLI is the third-best-performing Sector SPDR ETF, rising by 17.3% while outperforming SPY by 0.3%.

Chart 2

Technology (XLK)

Offensive Technology (XLK) is the SEAF Model’s third-ranked sector this week, with a Ranking score of 12, from 14 a week earlier.  Technology has been one of the top three-ranked sectors for 28 of the past 31 weeks beginning on Apr 24th, and has been the top-ranked sector 19 times during this period.  The green highlights in Chart 3 below show that Technology edged back into Favored status on Nov 26th, which has coincided with 3.3% of relative outperformance by XLK versus the benchmark S&P 500 (SPY) thus far.  Expanding investor assets drive rising asset prices.  Year-to-date, according to ssga.com, XLK is the best-performing Sector SPDR ETF, rising by 26.1% while outperforming SPY by 9.1%.

Chart 3