What Is The SEAF™ Model?
SEAF® is an acronym for Sector ETF Asset Flows. The SEAF Model was created to quantitatively identify long/overweight opportunities in US market sectors. SEAF does this by “following the money” as it moves around the 11 Select Sector SPDR ETFs, which together comprise the S&P 500. Following the movement of money identifies these opportunities sooner and more accurately because, with the SEAF Model, we can see the money moving before the trends this money movement creates become apparent.
Current SEAF Model Overlay Signals & Related Performance
Editor’s Note: These are the latest specific trading signals generated by our SEAF Model Overlay, which adds some rules-based entries, exits, and money management components to the model’s asset flows-generated Ranking system.
The backtested performance data below is based on trading a predetermined amount of assets with an equal allocation of those assets across all signals regardless of how many there are. The model is updated once per week, on the weekend, and any rebalancing takes place on the opening the following Monday morning. This is the recommended way to invest via the SEAF Model. Contact us for any additional clarification.
- Effective Monday 10/16, there is a new buy/overweight signal in the Communication Services Select Sector SPDR Fund (XLC).
- Effective Monday 10/16, there is a new buy/overweight signal in the Energy Select Sector SPDR Fund (XLE).
- The model has closed out its 10/2 buy/overweight signal in the Consumer Discretionary Select Sector SPDR Fund (XLY) for a 1.3% outright loss while underperforming the SPDR S&P 500 ETF Trust (SPY) by 2.2%.
- Since 10/9, the Technology Select Sector SPDR Fund (XLK) has declined by 0.3% outright while outperforming the SPDR S&P 500 ETF Trust (SPY) by 0.1%.
The SEAF Model Graphic
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 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, and the top two sectors in each category according to a negative change in outflows are highlighted in red. 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 SEAF Model Overlay buy/overweight signals, as indicated in the shaded rectangle above, are initiated by sectors that are one of the top two in positive change in inflows in multiple time periods, and then maintained by remaining one of the top two sectors in at least one time period. In addition, there are money management rules built into the Overlay.
Data through 10-12-2023. Click the table above to enlarge
The latest data in multiple time frames indicate an existing multi-timeframe trend of asset inflows into Energy (since 9/7) and a new multi-timeframe trend of asset inflows into Communication Services (since 10/12). This is where the money is currently going in the sector space.
The latest data also indicate new multi-timeframe trends of asset outflows from Consumer Discretionary, Consumer Staples, and Financials (all since 10/12). This is where the money is coming from.
How To Interpret The SEAF Graphic
The SEAF Model Graphic above is divided into 6 columns:
- Sector (Symbol): the 11 Select Sector SPDR ETFs.
- % through (closing date): the percentage of the S&P 500 that each of the 11 Sector SPDRs comprises through the closing date shown.
- Trading (week): the Ranking of investor asset flows over the past week, from most aggressive inflows (1) to most aggressive outflows (11).
- Tactical (month): the Ranking of investor asset flows over the past month, from most aggressive inflows (1) to most aggressive outflows (11).
- Strategic (quarter): the Ranking of investor asset flows over the past quarter, from most aggressive inflows (1) to most aggressive outflows (11).
- Ranking: The sum of Rankings in all three time periods, sorted from most aggressive inflows (1) to most aggressive outflows (11).
The SEAF Model Charts
SEAF Model Weekly Composite Rankings Charts
The SEAF Model Scores chart below displays the rankings shown in the graphic above according to Favored (score of 1-15, green), Neutral (score of 16-24, yellow), and Avoid (score of 25-33, red) sectors. On this chart, the SEAF Model Overlay signals are highlighted in a brighter shade of green.
Click the chart below to enlarge