The Sector Edge - Dec. 1, 2025

Stephen Suttmeier
5 days ago
15 min read

*** Please see the bottom of this report for important disclaimers and disclosures.***

Ranks plus setups for XLK, XLY, XLC, XLU, and XLV

Tactical Sector Ranks

Top Five Tactical Sector Ranks: Healthcare (XLV), Technology (XLK), Utilities (XLU), Communication Services (XLC), and Discretionary (XLY). XLY replaces Energy (XLE) in the top five. XLV, XLK, XLU, and XLC also appear in the top five of the 52-week Ranks.

Bottom Five Tactical Sector Ranks: Consumer Staples (XLP), Real Estate (XLRE), Materials (XLB), Financials (XLF), and Industrials (XLI). XLI replaces XLY in the bottom five. XLP, XLRE, XLB, and XLF also rank in the bottom five of the 52-week Ranks.

Technology (XLK): Reasserts weekly uptrend on close above 13-WMA

XLK is resilient with a close back above its rising 13-week moving average (WMA) near 282. This suggests that the late November break of support near 278 is a failed breakdown and establishes support from 273 to 267 (the lows for the weeks ending 11/28 and 11/21), which is reinforced by the rising 26-WMA near 268. Holding above or near these supports suggests that XLK can overcome its early November weekly exhaustion gap and bearish engulfing pattern to retest the 302-312 area (100% extension, October high, and target for the mid 2025 breakout).

Discretionary (XLY): Defends 26-/40-WMAs and could form a cup and handle

XLY invalidated a tactical double top, defending the zone between rising 26- and 40-week moving averages from 228 to 218 as key support. Continuing to hold this zone, along with the lows of the last two weeks from 227 to 220 and a key 38.2% retracement at 216, would keep the absolute trend bullish and support the case for potential late 2024 into late 2025/early 2026 cup and handle pattern.

Communication Services (XLC): A potential bullish flag

XLC continues to trade within a bullish consolidation pattern (Nov 10 The Sector Edge). A sustained move above 114–115 (tactical downtrend line and rising 13-week moving average) would confirm a bullish flag and reassert the uptrend with upside potential to 126–128 and possibly higher. If XLC begins to struggle, continuing to hold chart support and rising 26- and 40-WMAs from 111 for 105 would keep the overall trend constructive.

Utilities (XLU): Bullish dip while above 88.39-87.52 with potential to 95

XLU maintains a bullish absolute trend even after testing upside counts tied to both its late-2024 to mid-2025 bullish consolidation and its larger late-2022 to mid-2024 base at 89.75 and 91.50. The mid-October to late-November pullback successfully held the rising 13-week moving average at 88.39, establishing a support zone defined by the last two weekly lows at 87.72–87.52. As long as XLU holds above the 88.39–87.52 area, the near-term pattern remains constructive with upside potential toward 95 based on the pattern projection.

Healthcare (XLV): Tests resistance at the late 2024 highs near 157-160

XLV continues to trend bullishly after breaking out of its April–October basing pattern, which invalidated the early-2024 to early-2025 head and shoulders top. The ETF has already met its tactical base target at 153.25 and has pushed into the next resistance zone at the late-2024 highs near 157–160, a logical area for some profit-taking. Still, the saying that “a failed head-and-shoulders top is the most bullish pattern” supports a buy-the-dip mindset, with pullbacks toward the former shoulder region around 153–148 likely offering support.

Sector Ranks and Scores

S&P 500 GICS Level 1 Sector ETF Ranks and Scores

We evaluate the relative strength and momentum of S&P 500 GICS Level 1 sector ETFs using a multi-dimensional ranking approach. This analysis incorporates both short-term and long-term performance metrics to identify sector leadership and underperformance. Key inputs include Tactical Rank, 52-week Rank, Trend Scores, and Long-term Trend Scores. Trend Scores are evaluated on both an absolute price basis and relative to the S&P 500 (SPX) benchmark. Combined, these indicators provide a comprehensive view of each sector’s technical condition and trend durability across multiple timeframes.

Key Indicators

Tactical Rank: Uses three short- to intermediate-term weekly simple moving averages (WMAs) to determine the rank: The 13-, 26-, and 40-WMAs. Longer WMAs carry greater weight in the ranking.
52-week Rank: Calculated using the 52-week rate of change to assess longer-term strength.
Trend Score: Ranges from -10 to +10 and incorporates the 13-, 26-, and 40-WMAs. Higher scores indicate stronger trends with prices above rising WMAs. Lower scores indicate weaker trends with prices below declining WMAs. Longer WMAs are more heavily weighted.
Trend Score vs. SPX: Applies the same methodology as the Trend Score but uses the ratio of the ETF versus to the S&P 500 Index to determine relative performance.
Long-term Trend Score: Ranges from -20 to +20 and includes the 13-, 26-, 40-, and 200-WMAs. Higher scores reflect stronger long-term uptrends, while lower scores indicate long-term downtrends. Longer WMAs carry more weight.
Long-term Trend Score vs. SPX: Applies the Trend Score LT methodology to the relative price ratio of the ETF compared to the S&P 500.

Healthcare the standout leader over the last three months

The S&P 500 (SPX) rallied 5.3% over the last three months. Healthcare, Technology, and Utilities have provided leadership, with Healthcare the standout positive sector given a 3-month return of 15.5%. Communication Services, Discretionary, Energy, and Industrials were also up over this period but have lagged the SPX. Real Estate, Financials, Consumer Staples, and Materials trailed more meaningfully with negative three-month returns.

Chart 1: Sector ETF and SPX price returns over the last three months

Source: Optuma, Suttmeier Technical Strategies

S&P 500 GICS Level 1: Sector ETF Summary

Top Five Tactical Sector Ranks: XLV, XLK, XLU, XLC, and XLY

The Top Five Tactical Sector Ranks: Healthcare (XLV), Technology (XLK), Utilities (XLU), Communication Services (XLC), and Discretionary (XLY). XLY replaces Energy (XLE) in the top five. XLV, XLK, XLU, and XLC also appear in the top five of the 52-week Ranks.

Bottom Five Tactical Sector Ranks: XLP, XLRE, XLB, XLF, and XLI

The Bottom Five Tactical Sector Ranks: Consumer Staples (XLP), Real Estate (XLRE), Materials (XLB), Financials (XLF), and Industrials (XLI). XLI replaces Discretionary (XLY) in the bottom five. Four of these—XLP, XLRE, XLB, and XLF—also rank in the bottom five of the 52-week Ranks.

Tactical Ranks

· Top Five: Healthcare, Technology, Utilities, Communication Services, and Discretionary

· Bottom Five: Staples, Real Estate, Materials, Financials, and Industrials

52-week Ranks

· Top Five: Technology, Communication Services, Utilities, Healthcare, and Industrials

· Bottom Five: Real Estate, Materials, Energy, Staples, and Financials

Trend Scores

· Bullish absolute and vs. SPX: Technology

· Bearish absolute and vs. SPX: None

· Bullish absolute but negative relative scores: XLC, XLU, XLI, XLY, XLF, XLE, XLB, and XLRE

· Zero relative scores: Healthcare

Long-term Trend Scores (LT Trend Score)

· Bullish absolute and vs. SPX: Technology and Communication Services

· Bearish absolute and vs. SPX: None

· Bullish absolute but negative relative scores: XLV, XLU, XLY, XLE, XLI, XLF, XLB, XLRE, and XLP

Table 1: S&P 500 GICS Level 1 Sector ETF Trend Ranks and Scores as of 11/28/2025: Sorted by Tactical Rank

Source: Optuma, Suttmeier Technical Strategies

Sector ETF Trend Scores for the last 10 weeks

· Strongest: XLC, XLY, XLV, XLI, XLK, and XLU (maximum positive) followed by XLF and XLB

· Weakest: XLP

· Bullish flips: XLB (+8 from zero) and XLRE (+6 from -6)

· Positive over last 10 weeks: XLC, XLY, XLF, XLI, XLB, XLK, and XLU

· Negative over the last 10 weeks: XLP

· Improved last four weeks vs. prior four weeks: XLE, XLV, and XLB

· Deteriorated last four weeks vs. prior four weeks: XLRE (but a bullish flip last week)

Table 2: Sector ETF Trend Scores for the last 10 weeks

Source: Optuma, Suttmeier Technical Strategies

Sector ETF Trend Scores vs. the S&P 500 for the last 10 weeks

· Strongest: XLK – the only sector with a positive Trend Score vs. the SPX

· Weakest: XLY, XLP, XLE, XLF, XLB, and XLRE (all maximum negative)

· Positive over last 10 weeks: Only XLK

· Negative over the last 10 weeks: XLP, XLE, XLF, XLB, and XLRE

· Improved last four weeks vs. prior four weeks: XLE and XLV

· Deteriorated last four weeks vs. prior four weeks: XLC, XLY, XLK, and XLU

Table 3: Sector ETF Trend Scores relative to the S&P 500 for the last 10 weeks

Source: Optuma, Suttmeier Technical Strategies

Sector ETF Long-term Trend Score for the last 10 weeks

· Strongest: XLC, XLY, XLV, XLI, XLK, and XLU (maximum positive) followed by XLF and XLB

· Weakest: XLP followed by XLRE

· Bullish flips: XLRE (+4 from -8)

· Positive over last 10 weeks: XLC, XLY, XLE, XLF, XLI, XLB, XLK, and XLU

· Negative over the last 10 weeks: None

· Improved last four weeks vs. prior four weeks: XLE, XLV, and XLB

· Deteriorated last four weeks vs. prior four weeks: XLC and XLRE (but a bullish flip last week)

Table 4: Sector ETF Long-term Trend Scores for the last 10 weeks

Source: Optuma, Suttmeier Technical Strategies

Sector ETF Trend Long-term Scores vs. the S&P 500 for the last 10 weeks

· Strongest: XLK followed by XLC – the only positive sectors

· Weakest: XLY, XLP, XLF, XLB, and XLRE (all maximum negative) followed by XLU

· Positive over the last 10 weeks: XLC and XLK

· Negative over the last 10 weeks: XLY, XLP, XLE, XLF, XLV, XLB, XLRE, and XLU

· Improved last four weeks vs. prior four weeks: XLV

· Deteriorated last four weeks vs. prior four weeks: XLC, XLY, and XLU

Table 5: Sector ETF Long-term Trend Scores relative to the S&P 500 for the last 10 weeks

Source: Optuma, Suttmeier Technical Strategies

Relative rotation graph (RRG)

What is the RRG?

The Relative Rotation Graph (RRG) highlights sector leadership and rotation by plotting relative strength (x-axis) against relative momentum (y-axis) versus a benchmark. This creates four quadrants: Leading (upper right – positive relative strength and relative momentum), Weakening (lower right – positive relative strength and negative relative momentum), Lagging (lower left – negative relative strength and relative momentum), and Improving (upper left – negative relative strength and positive relative momentum). This framework shows the rotation of sectors through different phases of relative performance. Sectors tend to move in the clockwise direction, often crossing through all four quadrants.

Bullish RRG rotation: XLV, XLU, XLRE, and XLP – Defensives

The sectors with a positive, up-and-to-the-right heading—indicating improving relative momentum and relative strength—are XLV, XLU, XLRE, and XLP – all Defensive sectors. XLV rotates into Leading from Improving. XLU is in Improving and approaching Leading. XLRE and XLP also show bullish rotation within Improving.

Bearish RRG rotation: XLK, XLC, and XLY – Growth sectors

Sectors with a negative, down-and-to-the-left heading—signaling deteriorating relative momentum and relative strength—are the Growth sectors of XLK, XLC, and XLY. XLK remains within Weakening after failing to push back into Leading in mid November. XLC and XLY are in the Lagging quadrant. The remaining four sector ETFs are the Cyclical sectors: XLE, XLI, XLF, and XLB. XLI, XLF, and XLB show an uptick in relative momentum in Lagging, as XLE shows a small downtick in momentum in Improving.

Chart 2: Relative rotation graph (RRG) for the S&P 500 sector ETFs

Source: Optuma, Suttmeier Technical Strategies

Sectors on the move

Technology (XLK): Reasserts weekly uptrend on close above 13-WMA

Chart 3: SPDR Technology Select Sector Fund ETF (XLK): Weekly chart

Source: Optuma, Suttmeier Technical Strategies

Discretionary (XLY): Defends 26-/40-WMAs and could form a cup and handle

Chart 4: SPDR Discretionary Select Sector Fund ETF (XLY): Weekly chart

Source: Optuma, Suttmeier Technical Strategies

Communication Services (XLC): A potential bullish flag

Chart 5: SPDR Communication Services Select Sector Fund ETF (XLC): Weekly chart

Source: Optuma, Suttmeier Technical Strategies

Utilities (XLU): Bullish dip while above 88.39-87.52 with potential to 95

Chart 6: SPDR Utilities Select Sector Fund ETF (XLU): Weekly chart

Source: Optuma, Suttmeier Technical Strategies

Healthcare (XLV): Tests resistance at the late 2024 highs near 157-160

Chart 7: SPDR Healthcare Select Sector Fund ETF (XLV): Weekly chart

Source: Optuma, Suttmeier Technical Strategies

S&P 500 GICs 1 “cyclical” sector ETF charts

Financials: Absolute support holds, but relative trend scores maximum bearish

Financials (XLF) remain in a positive absolute trend, supported by rising 26- and 40-WMAs and the late-June breakout from a bullish consolidation. However, trend scores versus the SPX remain at maximum negative levels. The late September break below key relative support indicated a further loss of leadership for this cyclical sector, but important absolute price support is holding so far (Nov 10, Nov 3, and Oct 20 The Sector Edge).

Charts 8 and 9: Financials (XLF) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Industrials: Solid absolute price trend needs help from relative strength

The Industrials sector (XLI) consolidates near recent record highs as absolute trend scores shift back to maximum positive levels. Lackluster scores vs. the SPX and with 13-week relative lows call into question the potential mid-2023 to late-2025 bottoming pattern versus the SPX (Sep 22 The Sector Edge). In summary, XLI is positioned for absolute upside, but leadership from this cyclical sector is questionable.

Charts 10 and 11: Industrials (XLI) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Materials: Stabilizes on big positive shift in absolute price trend scores

Materials (XLB) defended its rising 200-week moving average and stabilized on a big positive shift in its absolute price trend scores to invalidate the risk of a tactical double top (Nov 3 and Oct 20 The Sector Edge). However, maximum bearish relative trend scores remain a big challenge, with XLB hitting another multi-year relative low vs. the SPX in late October prior to a November uptick. XLB is below declining WMAs and a long-term downtrend line relative to the SPX, which is a risky relative price setup for XLB (Sep 2 The Sector Edge).

Charts 12 and 13: Materials (XLB) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Energy: Stabilizes on both an absolute and relative price basis

Energy (XLE) has a choppy absolute price uptrend from the April low but has improved after holding important support (Nov 21 and Oct 20 The Sector Edge). Although XLE has stabilized from mid and late October lows vs. the SPX, which is a stronger tactical setup than most other sectors, it would take a decisive rally above the declining 26- and 40-WMAs and a long-term downtrend line vs. the SPX to suggest more enduring leadership for Energy.

Charts 14 and 15: Energy (XLE) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

S&P 500 GICs 1 “growth” sector ETF charts

Technology: Tactical dip within bullish absolute and relative trends

Technology (XLK) has dipped within bullish absolute and relative price trends. Last week’s close back above the rising 13-week moving average (WMA) moves the absolute trend scores back to maximum positive levels. XLK is retesting its September breakout point and rising 26-WMA relative to the SPX. Sustaining this tactical improvement would bode well for Technology, with the potential for this Growth sector to overcome its early November weekly upside exhaustion gap and bearish engulfing pattern (Nov 10 The Sector Edge).

Charts 16 and 17: Technology (XLK) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Discretionary: Defends absolute price uptrend but needs help vs. the SPX

Discretionary (XLY) defends its bullish absolute price trend (rising 26- and 40-week moving averages) on a shift back to maximum positive absolute price trend scores to invalidate the risk of a tactical double top (Nov 17 The Sector Edge). Even in the face of maximum negative relative trend scores, XLY continues to build a potential late 2022–late 2025 head and shoulders bottom vs. the SPX but must regain its 40- and 200-week relative price moving averages for any confidence in this developing bottom (Oct 6 The Sector Edge).

Charts 18 and 19: Discretionary (XLY) with Trend Scores (top) and Long-term Trend Scores (bottom)

Source: Optuma, Suttmeier Technical Strategies

Comm Services: Dip in uptrend on a loss of relative momentum

Communication Services (XLC) lost momentum on a downtick from maximum bullish absolute trend scores and a shift to a negative Trend Score vs. the SPX. Although this triggered a break below key supports vs. the SPX, XLC is within a corrective “buy the dip” phase within a bullish absolute price trend (Nov 10 The Sector Edge). One positive is that XLC’s relative 200-week moving average has begun to rise, which could underpin XLC’s Long-term Trend Score vs. the SPX.

Charts 20 and 21: Communication Services (XLC) with Trend Scores (top) and Long-term Trend Scores (bottom)

Source: Optuma, Suttmeier Technical Strategies

S&P 500 GICs 1 “defensive” sector ETF charts

Utilities: Bullish absolute dip and a potential H&S bottom vs. SPX

Utilities (XLU) has maximum positive trend scores, which confirm the sector’s breakout and retest from its November 2024 into July 2025 bullish consolidation. XLU has dipped within a bullish absolute price uptrend to suggest a “buy-the-dip” pattern (Nov 10 The Sector Edge). Trend scores versus the SPX improve within negative territory as XLU builds a potential late June into early November head and shoulders (H&S) bottom vs. the SPX. However, XLU must clear its 13-, 26-, and 40-WMAs vs. the SPX to maintain conviction in this relative H&S bottom.

Charts 22 and 23: Utilities (XLU) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Staples: Continues to struggle within a long-term lagging trend

The setup for Staples (XLP) remains challenged with maximum bearish relative trend scores vs. the SPX, but what’s challenging for Staples is bullish for the broader equity market (Sep 2 The Sector Edge). The long-term lagging trend remains firmly in place with continued multi-year relative lows prior to a November uptick. XLP continues to defend important absolute chart support and the rising 200-week moving average (Nov 3 The Sector Edge), even in the face of this long-term lagging trend vs. the SPX.

Charts 24 and 25: Staples (XLP) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Real Estate: Builds a big base but more conviction needed from trend scores

We continue to monitor a potential base-building process for Real Estate (XLRE) from mid 2022 (Oct 20 and Sep 29 The Sector Edge) but need a sustained improvement in absolute and relative trend scores for any confidence in this pattern. XLRE has positive absolute trend scores, but these scores have flipped between positive and negative levels since July as this sector struggles for direction. Trend scores vs. the SPX remain at maximum negative levels with another multi-year relative low for XLRE in late October prior to a November uptick.

Charts 26 and 27: Real Estate (XLRE) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Healthcare: Bullish rotation, positive absolute trend, and a double bottom vs. SPX

The bulls made a stand, triggering a rally out of a tactical base (Oct 6 The Sector Edge) that invalidated the early 2024-early 2025 head and shoulders (H&S) top. A failed H&S top is a bullish setup. Absolute trend scores have shifted to maximum positive levels to confirm this bullish shift. Trend scores relative to the SPX up-ticked from maximum bearish levels on recent 13-week relative highs to confirm a double bottom vs. SPX from the September and August lows.

Charts 28 and 29: Healthcare (XLV) with Trend Scores (top chart) and Long-term Trend Scores (bottom chart)

Source: Optuma, Suttmeier Technical Strategies

Suttmeier Technical Strategies, LLC (STS) provides financial commentary and market analysis for educational and informational purposes only. We are not registered investment advisors, and nothing published by STS should be considered personalized investment advice, a recommendation to buy or sell any security, or a solicitation to engage in investment activity. All content is impersonal and does not consider your individual financial circumstances. Past performance is not indicative of future results. Investing involves risk, and you should consult with a licensed financial advisor before making any investment decisions. STS or its representatives may hold positions in securities mentioned in our publications. Such holdings are subject to change without notice and do not constitute investment advice.

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