Weekly Momentum: Technology Dominates amid Materials Breakdown

Sector Leadership Is Narrow and Less Defensive

Technology (XLK) led at 26.5% three-month momentum — the rate at which price has changed over the past 13 weeks — up 2.0 points on the week. Breadth (the share of ETFs with positive momentum) weakened to 36.4%, leaving leadership narrow and increasingly concentrated in a small set of cyclical winners rather than broad participation.

Three Sectors Slip Below Zero while Financials Stabilize

Energy (XLE) climbed to 10.1%, up 4.8 points, holding in positive territory. It carries a 13-week rolling beta of -1.38 and correlation of -0.76 to SPY, leaving it as the clearest sector-specific winner moving against the broad market rather than riding the equity rally. Financials (XLF) improved to -0.6%, up 4.5 points, and remained just below zero.

At the center of leadership, XLK extended gains near its own 1-year high. XLK carries a beta of 1.47 and correlation of 0.89, confirming the strongest sector was still amplified and tightly tied to SPY. The broad market’s positive tone remained heavily dependent on growth. The headline leader was market-driven, while the secondary winner, XLE, moved on a separate macro track.

Defensive and materials-linked exposures remained under pressure. Healthcare (XLV) sat deepest at -7.6%, up 1.0 point, still in negative territory. A beta of 0.56 and correlation of 0.58 left it moving with lower amplitude and only moderate dependence on SPY. Utilities (XLU) fell to -5.0%, down 8.9 points, while Materials (XLB) dropped to -5.2%, down 5.8 points, with a breakdown (three-month momentum below the peer median and decelerating relative to peers). Industrials (XLI) also slipped to -1.3%, down 1.6 points. XLU carries a beta of 0.02 and correlation of 0.02, showing that setback was almost entirely detached from the equity tape. XLB, at 0.59 and 0.43, was also driven more by sector-specific weakness than by broad market direction.

Momentum Heatmaps

S&P 500 Sector Momentum

Beta & Correlation vs SPY — 3M Rolling

S&P 500 Sectors — Correlation vs SPY

S&P 500 Sectors — 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.