Tactical sector ranks

Tactical sector rankings over the last 10 weeks

• Growth-oriented sectors — Technology, Communication Services, and Consumer Discretionary — have consistently ranked in the top five over the past 10 weeks, reflecting continued leadership from growth themes.

• A defensive rotation is emerging, with Utilities and Healthcare moving into the top five.

• Meanwhile, Cyclicals have struggled. Industrials and Financials fell out of the top five in late September, with Financials holding in the bottom five for the past four weeks. Materials have remained in the bottom five for six consecutive weeks. Energy briefly attempted a bullish shift in rank but failed to sustain it, falling to the lowest tactical rank last week.

• The Defensive sectors of Real Estate and Consumer Staples have spent the last 10 weeks in the bottom five, though both improved in rank last week, hinting at potential stabilization.

Table 1: GICs Level 1 Sector ETF Tactical Ranks over the last 10 weeks

Ranks tilt Growth, then Defensive, followed by Cyclical

Averaging the Tactical Ranks across major style groups shows that Growth continues to lead the market. The average Tactical Rank for Growth sectors (Technology, Communication Services, and Consumer Discretionary) is 3, compared with 6 for Defensive sectors (Utilities, Healthcare, Real Estate, and Consumer Staples) and 9 for Cyclical sectors (Industrials, Financials, Materials, and Energy).

As shown in Table 2, Growth maintains its leadership position even as Defensives have improved relative to Cyclicals in the rotation observed moving into October.

Table 2: Average Tactical Ranks for Growth, Defensive, and Cyclical sector ETFs

See our Oct 20 The Sector Edge for more.

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