Council · Agent 01 · Weight 20%
Sector rotation map
Level is relative strength against SPY over three months. Momentum compares the last month's pace with the three-month average pace. Data through the close of 1 September 2026.
Where the leadership sits
level = 3-month relative strength · momentum = 1-month pace vs the 3-month average| ETF | Sector | RS 1m | RS 3m | RS 5m | Quadrant | Dir. |
|---|---|---|---|---|---|---|
| XLV | Health Care | +5.27 | +15.69 | +4.42 | Leading | → |
| XLE | Energy | +9.63 | +12.61 | +1.64 | Leading | ↗ |
| XLF | Financials | −0.86 | +10.79 | +0.55 | Weakening | ↘ |
| XLP | Consumer Staples | −0.08 | +3.50 | −8.62 | Weakening | ↘ |
| XLB | Materials | +1.54 | +1.83 | −11.90 | Leading | ↗ |
| XLRE | Real Estate | −3.07 | +1.35 | −9.27 | Weakening | ↘ |
| XLI | Industrials | −6.24 | −0.24 | −11.41 | Lagging | ↘ |
| XLU | Utilities | −4.60 | −1.68 | −21.49 | Lagging | ↘ |
| XLY | Consumer Discretionary | −3.60 | −3.47 | −10.61 | Lagging | ↘ |
| XLC | Communication Services | −0.96 | −4.52 | −14.81 | Improving | ↗ |
| XLK | Technology | +2.60 | −6.62 | +16.65 | Improving | ↗ |
Confirmation ratios
no cycle read counts without independent confirmation| Ratio | What it measures | 3m | 1m | Reading | Confirms late cycle? |
|---|---|---|---|---|---|
| XLY/XLP | Offense vs defense | −6.71% | −3.51% | Risk-off | Confirms |
| SPHB/SPLV | High beta vs low volatility | −8.97% | +2.09% | Risk-off | Confirms |
| SOXX/SPY | Semiconductors | −12.89% | −1.98% | Risk-off | Confirms |
| IWM/SPY | Small vs large | +0.12% | −2.44% | Neutral | Neutral |
| XLI/XLU | Industrials vs utilities | +1.46% | −1.71% | Neutral | Neutral |
| RSP/SPY | Equal weight vs cap weight | +3.56% | −0.32% | Risk-on | Contradicts |
| HYG/LQD | High yield vs investment grade credit | +2.57% | +0.58% | Risk-on | Contradicts |
| Copper/Gold | Real economy vs fear — direction only | ↑ rising | ↑ | Risk-on | Contradicts |
| IWF/IWD | Growth vs value — not measured | — | — | No data | — |
The signal this agent exists for
Composition divergence
The S&P 500 moved +0.43% over three months. In that same window leadership migrated out of Technology and Communication Services into Health Care, Energy and Materials, and the risk-appetite ratios turned down: XLY/XLP −6.7%, high beta against low volatility −9.0%, semiconductors against the index −12.9%. The index stood still; the composition behind it turned defensive. That is distribution dressed as a flat tape.
There is an honest counterpoint: the coherence test failed. Only 3 of the 9 ratios confirm the late-cycle phase. Compressing credit, copper near its highs and equal weight beating cap weight all point the other way. Two rotations on this map also have an identified, non-cyclical cause — Energy from the Middle East escalation, Utilities from California wildfire legislation that took PG&E and Edison down more than 20%. By the protocol, incoherent rotation loses weight, which is why Sector Rotation entered the matrix at −3 rather than −4.