Industrials Retains Top-Three Status For 8th 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, economically sensitive/offensive Industrials (XLI) is the best-performing sector according to the SEAF Model, while retaining a top-three SEAF Ranking Score for the eighth consecutive week.  Meanwhile, economically sensitive Energy (XLE) and defensive Consumer Staples (XLP) move into the second- and third-best spots, according to SEAF, both rising from Avoid status where they had languished for most of the past 12 months.  At the other end of the spectrum, cyclical Financials (XLF) and Consumer Discretionary (XLY), and economically sensitive Communication Services (XLC) are the three 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 Industrials and Energy in All time periods.
  • Money is aggressively moving into Consumer Staples and Utilities in the Trading time period.
  • 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 1-15-2026. Click the table above to enlarge

The latest data indicate a multi-timeframe trend of asset inflows into the Industrial sector.  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 Financial 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).

Industrials (XLI)

Economically sensitive Industrials (XLI) is the SEAF Model’s top-ranked sector this week, with a Ranking score of 7, up slightly from a score of 5 a week earlier.  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 eight weeks beginning on Dec 1st.  During this period, XLI has risen by 10.4% outright while outperforming the benchmark S&P 500 (SPY) by 8.9%.  On a trailing 12-month basis, according to ssga.com, XLI is the best-performing Sector SPDR ETF, rising by 21.2% while outperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 7.8%.

Chart 1

Energy (XLE)

Defensive Energy (XLE) is the SEAF Model’s second-ranked sector this week with a Ranking score of 8, rising from a score of 12 a week earlier.  Chart 2 below shows that Energy spent most of the past 12 months in SEAF Avoid status, with only two short-lived forays into Favored status in March and November. On a trailing 12-month basis, according to ssga.com, XLE is the second-worst performing Sector SPDR ETF, rising by just 1.3% while underperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 12.1%.

Chart 2

Consumer Staples (XLP)

Defensive Consumer Staples (XLP) is the SEAF Model’s third-ranked sector this week with a Ranking score of 9, up significantly from a score of 27 a week earlier, which is largely attributable to SEAF scores of 1 and 3 in the Trading and Tactical time periods last week.  Chart 3 below shows that Staples currently has the best SEAF score since Apr 16th of last year, which was followed by many failed attempts to move back into Favored status (upper panel) while XLP continued to underperform versus the S&P 500 (SPY, lower panel).  It would take a sustained period of Favored status by Staples to fuel a sustainable period of relative outperformance.  On a trailing 12-month basis, according to ssga.com, XLP is the seventh-best-performing Sector SPDR ETF, rising by 6.6% while underperforming the State Street® SPDR® Portfolio S&P 500® ETF (SPYM) by 6.8%.

Chart 3