Sector Momentum: Healthcare Leads at 16.0%

Defensive Groups Dominate Sector Leadership

Defensive leadership widened the sector spread as of August 7, with eight of the eleven S&P 500 sector ETFs positive on 3M momentum and a 2.8% median far below Healthcare XLV at 16.0% while Communication Services XLC trails at -4.6%. The 20.6pp spread widened 1.1pp, and the upper tier now runs through healthcare and financials while Technology XLK moved to 7.2% after a -1.3pp week. Participation is positive, and the right tail sits in defensive groups and financials while technology occupies the middle tier.

Healthcare XLV has been positive since June 5, and its -0.40 correlation to SPY gives the sector leader an inverse benchmark linkage. Financials XLF rose to 12.8%, and Industrials XLI broke out at 7.2% with a 0.28 beta that points to muted market amplitude. The upper tier pairs defense with selective cyclicals, and both linkage readings point to leadership that is less SPY-dependent than the headline ranks suggest.

Materials 3M Momentum Turned Positive

Materials XLB turned positive at 2.8% after a +4.2pp week, and its 0.49 beta leaves the new entrant in the positive cohort at muted amplitude. Energy XLE advanced to 4.0%, while Consumer Discretionary XLY improved to -0.1% and Utilities XLU climbed to -1.9%. The positive turn in materials broadens the field beyond the leaders, though the additions enter at low momentum levels.

Real Estate XLRE slipped 0.4pp into a breakdown at 2.2%, and its -0.56 correlation to SPY keeps that pocket defensive even as momentum fades. Consumer Staples XLP was unchanged at 1.8%, and XLC improved 2.4pp while extending a 12-week negative streak. Sector momentum is positive in count, and the tails place defense on the upside while growth-sensitive groups populate the downside.

S&P 500 Sectors ETFs Heatmaps

S&P 500 Sectors ETFs: 3M Momentum

S&P 500 Sectors ETFs: 3M Correlation vs SPY

S&P 500 Sectors ETFs: 3M Beta vs SPY

Romain Gandon
CEO, Quantlake

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results.