Industrials Retain Top-Three Status While Other Leaders/Losers Switch Places

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, economically sensitive/offensive Industrials (XLI) retains its Dec 1st top-three SEAF Ranking Score for the fourth consecutive week.  Meanwhile, also-offensive Communication Services (XLC) and Consumer Discretionary (XLY) jump into the top two SEAF rankings based on abrupt weekly changes to asset flows.  The common theme of erratic 2025 sector rotation has been politically driven indecision regarding the implementation of tariffs, emerging changes to previously solid 75-year trade relationships, and the direction of interest rates as it pertains to the future independence of the Federal Reserve.  Until these conditions change, sector rotation is likely to remain bumpy.  At the other end of the spectrum, 2025 trailer Energy (XLE) and 2025 leader Technology (XLK) are the two weakest sectors this week, 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 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 Communication Services and Consumer Discretionary in All time periods.
  • Money is aggressively moving into Industrials and Utilities in the Strategic time period.
  • Money is aggressively moving out of Energy and 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 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 12-18-2025. Click the table above to enlarge

The latest data indicate a multi-timeframe trend of asset inflows into the Communication Services and Consumer Discretionary 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 Energy and Technology 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).

Communication Services (XLC)

Offensive Communication Services (XLC) is the SEAF Model’s top-ranked sector this week with a Ranking score of 7, rising from the fourth-ranked sector a week earlier on the strength of being the second-ranked sector in the Trading and Tactical time periods.  Comcast was influential in this big one-week change, rising by 8.6% for the week.  The middle green highlights in Chart 1 below show that Communication Services’ sustained stay in Favored status between Aug 1st and October  2nd (upper panel) helped to fuel XLC’s coincident relative outeprformance versus the S&P 500 (SPY, lower panel) during that same period.  Year-to-date, according to ssga.com, XLC is the second-best-performing Sector SPDR ETF, rising by 20.4% while outperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 3.9%.

Chart 1

Consumer Discretionary (XLY)

Offensive Consumer Discretionary (XLY) is the SEAF Model’s second-ranked sector this week with a Ranking score of 8, making a huge move from being dead last a week earlier on the strength of being the top-ranked sector in the Trading and Tactical time periods.  Market cap behemoth Tesla (TSLA), which was up 4.9% last week, was a primary driver of this atypically big one-week change.  The green highlights in Chart 2 below show that Consumer Discretionary streaked into Favored status on Dec 17th, after languishing in Avoid status since mid-November.  Year-to-date, according to ssga.com, XLY is the seventh-best-performing Sector SPDR ETF, rising by 8.6% while underperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 7.9%.

Chart 2

Industrials (XLI)

Economically sensitive Industrials (XLI) is the SEAF Model’s third-ranked sector this week with a Ranking score of 13, dropping from a #1 ranking and a score of  7 a week earlier.  Industrials initially moved into Favored status on Nov 21st, as shown in Chart 3 below, and has become one of the top-three ranked sectors according to SEAF for the past four weeks, beginning Dec 1st.  Year-to-date (YTD), according to ssga.com, XLI is the third-best-performing Sector SPDR ETF, rising by 18.3% while outperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 1.8%.

Chart 3