Sector Momentum: Healthcare Leads at 15.9%

Defensive Leadership Dominates Sector Ranks

Defensive leadership sits on top as breadth widens in the sector ranks as of August 14. Ten of the eleven S&P 500 sector ETFs are positive on 3M momentum. The top-bottom spread compressed to 18.3pp from 20.6pp. The field centers at a 4.9% median, with Healthcare XLV at 15.9% on top. Communication Services XLC is the only sector below zero. The distribution leaves almost the whole map above zero, yet the strongest scores sit in defensive and low-linkage groups rather than in growth leadership.

Healthcare XLV has been positive since June 5, and XLV's -0.40 correlation to SPY gives the leadership an inverse market link. Financials XLF holds 14.2%, and Industrials XLI reaches 9.1% in a convex uptrend. Technology XLK is 7.9%, so cyclicals participate, but the top rank belongs to a defensive sector that moves differently from the benchmark.

Consumer Discretionary 3M Momentum Turned Positive

Consumer Discretionary XLY turned positive at 1.6% after a +1.7pp rise. XLY's 1.38 beta leaves the fresh positive turn highly tied to market swings. Utilities XLU turned positive at 1.6% with a +3.5pp move. The lower tier lifted above zero, yet the new cyclical foothold depends on high-amplitude equity risk.

Real Estate XLRE broke out at 5.6%, and XLRE's -0.62 correlation to SPY gives the mid-pack a clear diversifying pocket. Materials XLB climbed to 4.8% with a +2.0pp gain. Energy XLE is 4.9%, and Consumer Staples XLP is 2.4%. Communication Services XLC improved by +2.2pp from a low base, and that move keeps growth-tilted weakness isolated in one sector. The sector map is broad, but the breadth expansion comes from defensives and real estate as much as from the cyclical rebound.

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.