Question 1

What is sector rotation?

Accepted Answer

Sector rotation is the tendency of money to move between different segments of the stock market, such as energy, technology, or financials, as economic conditions and investor sentiment shift. Tracking which sectors are gaining or losing ground relative to the broader market can help identify these shifts as they happen.

Question 2

How does the Sector Rotation Monitor rank sectors?

Accepted Answer

Each of the eleven S&P sector ETFs is compared against the S&P 500 (SPY) over three separate windows: the last 5 trading days, the last 14 trading days, and the last 9 months. A sector's return over that window is subtracted from the S&P 500's return over the same window. Sectors with a positive difference are listed as leading, sectors with a negative difference are listed as trailing.

Question 3

Which sector ETFs are included?

Accepted Answer

All eleven S&P 500 sector SPDR ETFs are included: XLE (Energy), XLF (Financials), XLK (Technology), XLY (Consumer Discretionary), XLP (Consumer Staples), XLV (Health Care), XLI (Industrials), XLB (Materials), XLU (Utilities), XLRE (Real Estate), and XLC (Communication Services), each measured against SPY as the S&P 500 benchmark.