NEW! 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
Downtrodden Energy Now A Top SEAF Ranking
Conclusion, Investment Implications, Strategy

The SEAF Model made some very abrupt and aggressive wholesale changes last week toward energy and interest rate-related sectors, from more Risk On related sectors (Communication Services, Consumer Discretionary, Technology) sectors a week earlier.  Moreover, Technology, which typically leads the broad market higher during a bull market, quickly collapsed to the weakest sector this week with a SEAF Ranking Score of 27 and dead last scores in the Trading and Tactical time frames. This could be a defensive reflex by the market as the new presidential administration comes into power amid talk of inflationary tariffs and the deportation of low wage workers. 


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 shows where sector-related assets are going, and where they are leaving, in the 11 Sector SPDR ETFs, and also dissects our SEAF “Rainbow Charts” which display the past 12 months of Favored, Neutral, or Avoid rankings in several key market sectors. 

From The Video: This Week’s Major Themes
  • Money aggressively moving into Financials in All time periods.
  • Money aggressively moving into Energy in the Trading and Tactical time periods.
  • Money aggressively moving out of Technology in the Trading and Tactical 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.S

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 that the money is going into and to avoid the sectors the money is coming out of.  

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.

The SEAF Model

Click the table to make it larger

The latest data indicate a multi-timeframe trend of asset inflows into Financials and Energy.  This is where the money is currently going in the sector space.

The latest data also indicate a multi-timeframe trend of asset outflows out of Technology and Health Care.  This is where the money is coming from.


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).

Communication Services (XLF)

Cyclical Financials (XLF) is the SEAF Model’s top-ranked sector this week with a very strong Ranking score of 4.  The rightmost green highlights in the upper panel of Chart 1 below show that Financials streaked into Favored status late last week as the daily relative performance chart of XLF versus the benchmark S&P 500 (SPY, lower panel) responded with sharp relative outperformance.  The green highlights in the middle of the chart show that a previous sustained period of Favored status according to the SEAF Model between Oct 11th and Dec 4th coincided with 3% of relative outperformance by Financials versus the broad market.

Chart 1

Energy: XLE

Economically sensitive Energy (XLE) is the SEAF Model’s second-best-ranked sector this week, with a Ranking score of 10.  The green highlights in the upper panel of Chart 2 below show that Energy moved back into Favored status on Jan 13th — and that the latest SEAF Ranking of 10 is testing previous Favored extremes in November and October of last year.  Also note that XLE has outperformed the benchmark S&P 500 (SPY, lower panel) by 9% since Energy bottomed out according to the SEAF Model on Dec 19th.  A sustained SEAF Ranking of 10 or greater in the weeks ahead would suggest there is enough bullish conviction in rising energy prices to support more relative outperformance by Energy.

Chart 2

Industrials: XLI

Economically sensitive Industrials (XLI) is the SEAF Model’s third best-ranked sector this week, with a Ranking score of 13.  The green highlights in Chart 3 below show that Industrials edged into a Favored Ranking on Jan 13th.  Also note that XLI has outperformed the benchmark S&P 500 (SPY) by 5% since Industrials bottomed out according to the SEAF Model on Jan 6th.  The green highlights in the middle of the chart show that a previous sustained period of Favored status according to the SEAF Model between Mar 18th and May 14th coincided with 2% of relative outperformance by Industrials versus the broad market.

Chart 3