Sector Analysis
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Net Sector Bullishness aggregates trend signals from all 11 stock market sectors into a single indicator. Higher values suggest broader market strength and increase the likelihood of the market rising as a whole. Each sector contributes: +2 (Bullish Trend), +1 (Bottoming), -1 (Topping), or -2 (Bearish Trend). Bottoms or early bullish trends typically offer great opportunities for swing trades in the long direction.
All-Sectors Indicator vs S&P
See how the Net Sector Bullishness Indicator performed historically against the market. The SPY chart is colored by the Sector Indicator Regimes to help see how it performed in the past.
Historical Sector Weights in the S&P 500
Market-cap share of each of the 11 GICS sectors within the S&P 500, daily back to 1996. See how Technology rose from ~10% (1996) to ~30% (today), how Financials peaked above 30% in 2000 and crashed to ~9% in 2008, and how Energy went from 10%+ (2008 oil spike) to under 3% (2020 collapse). Approximation: per-ticker shares outstanding held constant at today's implied value; today's GICS sector applied retroactively.
Sector Rotation
The 11 S&P 500 sectors can be categorized into 4 groups that react differently to liquidity and economic conditions. Our Strength Indicator identifies when institutional money flows into or out of specific groups and sectors, creating the "rotation" among them.
The Rank reflects relative strength — sectors with higher momentum rank closer to 1. The Momentum column indicates the current phase in the rotation cycle: Bullish Trend and Bearish Trend are straightforward, while sideways consolidation is classified as Bottoming or Topping based on prior trend direction. The Entropy column shows how persistent that path is — Bullish/Bearish Trend = directional, Accumulation/Distribution = consolidation, Extreme Uncertainty = chaotic.
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Sector Rotation Chart
The Sector Strength Indicator filters out noise from erratic price movements as well as the underlying trend, yielding an oscillator-like curve. Unlike a classical moving average, this curve shows almost no lag to the original data (e.g., an MA20 peaks 20 bars after the price chart has peaked). A slope change in the Strength Indicator signals a sudden shift in money flow and often hints at the onset of the next "swing" in that particular sector. A trend should be bought at the beginning, right after a bottoming phase — this coincides with a rising slope after a minimum has formed in the sector.
Intra Sector Rotation - Theme ETFs and Industries
The Strength Indicator helps determine which industries or themes are currently favored by investors within each sector. (Note: Not all sector industries are covered by theme ETFs.) The Momentum column shows the slope-regime of that strength (Bullish/Bearish Trend, Bottoming, Topping), and Entropy shows how persistent the path is (directional Trend vs. Accumulation / Distribution / Extreme Uncertainty) — the same two regime lenses used in the sector table above.
| Ticker | Theme | Rank | Strength | Momentum | Entropy |
|---|
Sector Overview & Rotation
Financial markets do not move uniformly. Capital continuously rotates between sectors depending on interest rates, economic growth, inflation, commodity prices, and liquidity conditions.
Sector Groups
Growth
Technology, Communication Services, Consumer Discretionary
Benefit from low interest rates and ample liquidity; vulnerable to tightening conditions.
Value
Financials, Real Estate, Industrials
Benefit from inflation and rising rates; underperform during deflation or recession.
Cyclicals
Materials, Energy
Perform best during economic expansions and early recovery phases.
Defensives
Healthcare, Utilities, Consumer Staples
Outperform during uncertainty and economic downturns; lag in risk-on rallies.
Key Macro Drivers
| Driver | Rising / Expanding | Falling / Contracting |
|---|---|---|
| Interest Rates | Financials, Value | Growth, Technology, Real Estate |
| Economic Growth | Cyclicals, Discretionary, Industrials | Defensives (Staples, Utilities, Healthcare) |
| Commodities | Energy, Materials | Technology, disinflation-sensitive |
| Liquidity | Growth, Risk Assets | Defensives, Bonds, Cash |
Economic Cycle & Sector Rotation
Recession
Staples, Utilities, Healthcare
Early Expansion
Financials, Industrials, Discretionary
Late Expansion
Technology, Communication, Energy
Slowdown
Rotation to Defensives
Further Reading: For detailed sector-by-sector analysis including specific drivers for each sector and complete rotation patterns, see our Sector Rotation Guide.
