Industrials Retains Top-Three Status For 7th Consecutive Week

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) moved back into top-three status according to the SEAF Model for the first time since Dec 15th.  Meanwhile, economically sensitive/offensive Industrials (XLI) retains a top-three SEAF Ranking Score for the seventh consecutive week, and cyclical Financials (XLF) XLF, after spending from late September through late December in Avoid status, has also moved back into top-three status according to SEAF.  At the other end of the spectrum, aggressive Technology (XLK) and Utilities (XLU), the latter which some now see as an offensive sector due to the massive power needs for artificial intelligence (AI), are the two weakest sectors and in Avoid status.  

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 provide a daily 12-month lookback at SEAF’s previous Favored, Neutral, and Avoid rankings. 

From The Video: This Week’s Major Themes
  • Money is aggressively moving into Health Care, Industrials, and Financials in all time periods.
  • Money is moving into Energy in the Trading and Strategic time periods.
  • Money is aggressively moving out of Technology, Utilities, and Consumer Staples 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 1-8-2026. Click the table above to enlarge

The latest data indicate a multi-timeframe trend of asset inflows into the Health Care and Industrial 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 Technology and Utilities sectors.  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)

Defensive Health Care (XLV) is the SEAF Model’s top-ranked sector this week with a Ranking score of 5, up significantly from 16 a week earlier, before moving back into Favored status on Jan 7th.  Health Care has been one of the top three-ranked sectors for nine of the past 14 weeks beginning on Oct 13th, and is the 6th-best-performing sector on a trailing 12-month basis according to ssga.com, rising by 12.0% outright while underperforming the benchmark S&P 500 (SPY) by 5.8%.  Chart 1 below shows that XLV had previously maintained a Favored SEAF status between Oct 3rd and Dec 18th (upper panel) while XLV coincidentally outperformed the State Street® SPDR® Portfolio S&P 500® ETF (SPYM, lower panel) by 7.0%.

Chart 1

Industrials (XLI)

Economically sensitive Industrials (XLI) is the SEAF Model’s second-ranked sector this week, also with a Ranking score of 5, which is up from a score of 11 a week ago.  Industrials initially moved into Favored status on Nov 21st, as shown in the upper panel of Chart 2 below, and has been one of the top-three ranked sectors according to SEAF for the past seven weeks beginning on Dec 1st, rising by 21.9% outright while outperforming the benchmark S&P 500 (SPY) by 5.0%.  On a trailing 12-month basis, according to ssga.com, XLI is the second-best-performing Sector SPDR ETF, rising by 21.9% while outperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 4.1%.

Chart 2

Financials (XLF)

Cyclical Financials (XLF) is the SEAF Model’s third-ranked sector this week with a Ranking score of 10.  Financials previously spent from late September through late December in Avoid SEAF status (upper panel) as XLF underperformed the benchmark S&P 500 (SPY, lower panel), but has most recently moved into Favored status as of Jan 5th.  The longer that Financials remain in Favored status, the more likely XLF will outperform the S&P 500 (SPY) in the upcoming weeks.  On a trailing 12-month basis, according to ssga.com, XLF is the fourth-best-performing Sector SPDR ETF, rising by 14.9% outright while underperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 2.9%. 

Chart 3