SMO Exclusive: SPDR Sector ETFs Strength Report Friday 2025-01-31 Strengthened +0.3 to 4.6 Strength Score

Brian Degracia

31 Jan 2025 • 11 min read

U.S. MARKET STRENGTHENED FOR THE WEEK ENDING FRIDAY 2025-01-31. Three of 11 ETFs/sectors strengthened enough to change rating (XLF/Financial, XLP/Consumer Staples, and XLV/Health Care) while one weakened enough to change rating (XLE/Energy). XLF/Financial is strongest at 3Stronger. There are four ETFs/sectors tied for weakest at 6Weak - XLB/Materials, XLE/Energy (weakened one rating), XLP/Consumer Staples (strengthened one rating) and XLRE/Real Estate.

This post consists of the following five sections:

I. Introduction
II. Weekly Returns
III. Spectrum Graph Analysis
IV. Today's Market Context
V. Detailed Sector ETF Analysis

Last Friday's ETF strength report is available here.

I. Introduction

Background

This analysis consists of the Stock Market Organizer stock-by-stock strength analysis applied to the 500 stocks that comprise the 11 SPDR Select ETFs.

These results are combined with overall market environment readings (via the Market Strength Score and the Sector Risk Gauge which currently reflects "risk OFF") to discern appropriate portfolio exposure given prevailing market and sector conditions.

Why do you care?

This dynamic market analysis provides a continuously updated, apples-to-apples comparison of the strengthening and weakening trends in the US market. By tracking the 500 large-cap stocks across 11 key sectors (via SPDR ETFs), this analysis offers valuable insights for investors seeking to harness momentum in their portfolios.

Each week, the analysis clearly identifies which sectors and stocks have gained, remained flat, or lost ground. With this data, investors can objectively assess sector and stock strength, refining their timing and positioning for new investments. Ultimately, this approach aims to enhance long-term portfolio performance by leveraging momentum – a proven market factor – to inform data-driven investment decisions.

Most Important Ranking: Strengthening Status

The following Strengthening Status spectrum graph shows the ETFs based on their current strengthening status, as compared to last week.

Sector rating strengthening and weakening are important signals showing the user where material movement is happening.

These are ordered based on important distinctions - did an ETF strengthen or weaken, enough (or not) to change rating, and where in the ratings scale (aka the spectrum of possibilities) does the ETF currently lie?

This graphic clearly provides this key information at a glance.

The upper and lower portions in these graphics show the same information, presented in different manners. The purpose is to provide a clear understanding of where there is strengthening and weakening, both minor and major, in the sectors that comprise the market.

The past three weeks Strengthening Status show a transition from strengthening to weakening to strengthening this week. The upper portions show strengthening from the top row down, while the lower portions show strengthening from right to left. These graphics are set up to clearly convey which ETFs/sectors strengthened or weakened, and from/to where this happened. Though it is impossible to determine how long these signals will last (what will be), the critical point is that these are the objective strength levels of these ETFs right now (what is).

Bottom Line Translation

Each ETF/Sector is given a Bottom Line rating below on a scale of -3 (Worst) to +3 (Best) based on A) the ending strength rating of each ETF and B) the strengthening/weakening action of the ETFs during the week, with the five possibilities being 1) strengthened enough to increase rating, 2) strengthened but not enough to increase rating, 3) unchanged, 4) weakened but not enough to decrease rating, and 5) weakened enough to decrease rating.

CURRENT WEEK ENDING FRIDAY, JANUARY 31, 2025. These summary ratings take into account the strength rating and strength action of each of the 11 ETFs for the just-completed week, on a scale of -3 (Worst) to +3 (Best).

Results for the week ending Friday, January 24, 2025.

Results for the week ending Friday, January 17, 2025, after a strong week.

II. Weekly Returns

Average Returns

The average returns for the underlying stocks in each ETF are shown below - note this is NOT the return for the ETF for this week.

The average returns ranged from -4.7% (XLE/Energy) to 1.3% (XLC/Communications), with 6 positive out of 11 sectors for the week.

The best and worst are highlighted below:

Best:

XLC/Communications, 1.3% average for 22 stocks
XLF/Financial, 1.1% average for 72 stocks
XLY/Consumer Discretionary, 1.0% average for 51 stocks

Worst:

XLE/Energy, -4.7% average for 22 stocks
XLK/Technology, -2.3% average for 69 stocks
XLI/Industrial, -1.2% average for 76 stocks

The bar chart shows the AVERAGE returns for the underlying component stocks, meaning the Equal Weight Average returns. The orange markers show the actual ETF return for this period.

High and Low Returns

The following graphic overlays the lowest and highest returns in each sector.

XLE/Energy was the worst performer while XLC/Communications Services had the strongest week.

III. Spectrum Graph Analysis

This methodology uses spectrum graphs to obtain key insights unavailable elsewhere.

Spectrum graphs are a key tool in this methodology that reflect where in the spectrum of possibilities currently lies a measured entity (market, sector, industry, sub-industry, stock) between the extremes of 9Weakest to 1Strongest. This helps the user objectively gauge when and if something is at an extreme. In turn, helpful signals are provided by tracking movements within the spectrum of possibilities.

There are currently four types of spectrum graphs in this ETF analysis:

By Strengthening - this is the most important graph, and it clearly shows in order the ETFs/sectors based on their strengthening/weakening performance during the week:
- Strengthened rating (rating change is most important signal)
- Strengthened but not enough to change rating
- Unchanged
- Weakened but not enough to change rating, and
- Weakened rating (rating change is most important signal).
By Type - logically groups the ETFs (for example, interest rate-sensitive, technology-related, consumer-related) for direct comparison with similar ETFs.
By Strongest to Weakest
Alphabetically

The remainder of this section uses types 2, 3, and 4 above to show current performance.

Context: Comparison to Recent Weeks

The following spectrum graphs by ETF Type show recent Friday week-to-week changes compared to the current week.

01/17/2025: Strengthening
01/24/2025: Weakening
01/31/2025: Strengthening

01/17/2025 = Strengthening, 01/24/2025 = Weakening, 01/31/2025 = Strengthening

Current Status: 4.6 Composite Score, Strengthened +0.3 this week

The following spectrum graph "Strongest to Weakest" shows the composition of the ETF ratings that comprise the current composite score, in order of Strength Rating. This is followed by an Alphabetical spectrum graph.

The upper spectrum graph shows the ETFs in decreasing order of Strength Rating and strengthening for the week while the lower spectrum graph is alphabetical. In the upper graphic, sectors with the same rating are listed as follows: first, sectors that strengthened rating during the week; second, sectors with ratings that did not change during the week but did strengthen; third, sectors with ratings that did not change during the week but did weaken; and fourth, sectors which weakened rating during the week. The color-coded lines delineate different ratings - 4Strong or stronger are separated by green lines, 6Weak or weaker are separated by red lines, and 5Average is separated by black lines.

The ETFs are listed below based on their strength rating.

1Strongest
None

2VeryStrong
None

3Stronger

XLF/Financial (STRENGTHENED RATING)

4Strong

XLV/Health Care (STRENGTHENED RATING)
XLC/Communication (Unchanged)
XLK/Technology (Unchanged)
XLU/Utilities (Unchanged)

4.6 - Composite Score

5Average

XLI/Industrial (Unchanged)
XLY/Consumer Discretionary (Unchanged)

6Weak

XLP/Consumer Staples (STRENGTHENED RATING)
XLB/Materials (Strengthened)
XLRE/Real Estate (Strengthened)
XLE/Energy (WEAKENED RATING)

7Weaker
None

8VeryWeak
None

9Weakest
None

IV. Today's Market Context

Indexes and ETFs Weekly Performance

This week's returns for four key indexes are shown along with the actual returns for the 11 ETFs for the week ending Friday, January 31, 2025.

Key Headlines

"Tech stocks have worst week in months after ‘nobody saw DeepSeek coming’"
"Trump’s tariffs on Canada, Mexico and China to start Saturday. Why they may be ‘just the warm-up.’"
"Intel’s forecast missed by a mile. Here’s why the stock is ‘numb’ to the problem."
"Why there’s now ‘incredible demand for physical gold’ in New York markets"
"Inflation Trends Could Keep Fed on Hold Until June, This Economist Says"
(Marketwatch)

"Dow closes 300 points lower Friday as White House says tariffs will start Saturday"
"Crash investigators looking at altitude, communication and staffing before helicopter collision with plane"
"Air ambulance carrying 6 crashes near mall in Philadelphia"
"Some federal websites temporarily go dark after order to comply with Trump DEI directive"
"Musk aides lock government workers out of computer systems at U.S. agency: Reuters"
(CNBC)

"Meta posts longest rally since 2015 as Wall Street cheers AI bet"
"Stocks retreat as Trump's pledge for tariffs rattles Wall Street"
"Gold Hits Record High on Weak Dollar as Trump Tariff Risks Loom"
"UPS Earnings Top Views But Shipping Giant Dives On Amazon News"
"Stock Market Today: Dow Jones Dives On Trump Tariff Order; Apple, Nvidia Break Key Levels As MicroStrategy Makes This Move"
(Yahoo!)

Key Current Readings

SP500: 6,040.53
Nasdaq: 19,627.44
Nasdaq 100: 21,478.05
Russell 2000: 2,287.69
10Y Treasury: 4.543%
2YT: 4.207%
Oil (WTI Crude): $73.81
Bitcoin: $102,252.49
Dollar Index: 108.5
Gold: $2,831.5
VIX: 16.43
(CNBC)

V. Detailed Sector ETF Analysis

The following Stock Market Organizer strengthening/weakening analysis looks at the 11 SPDR ETFs and their underlying component stocks for the just-completed week, as follows:

ETFs Summaries
1.1 Current: Component Stocks Strength Ratings (1Strongest vs. 9Weakest vs. Ignore Status)
1.2 Current: Component Stocks Positive vs. Negative Weekly Returns
1.3 Historical: 10 Week Ratings by ETF
1.4 Historical: 10 Week Ratings by Week
ETFs Detail
2.1 XLB Materials
2.2 XLC Communications
2.3 XLE Energy
2.4 XLF Financial
2.5 XLI Industrial
2.6 XLK Technology
2.7 XLP Consumer Staples
2.8 XLRE Real Estate
2.9 XLU Utilities
2.10 XLV Health Care
2.11 XLY Consumer Discretionary
Stock Detail (downloads)

1. ETFs Summaries

1.1 Current: Component Stocks Strength Ratings (1Strongest vs. 9Weakest vs. Ignore Status)

The following graphs reflect the composition of each of the ETFs based on their underlying component stock strength ratings which range from 1Strongest to 9Weakest. I only care about the strongest and weakest in each sector and thus categorize as "Ignore" stocks rated from 2VeryStrong through 8VeryWeak.

Top row: XLB/Basic Materials, XLE/Energy, and XLI/Industrial
Second row: interest rate-sensitive ETFs XLF/Financial, XLRE/Real Estate, and XLU/Utilities
Third row: XLK/Technology and XLC/Communications
Bottom row: XLP/Consumer Staples, XLY/Consumer Discretionary, and XLV/Health Care

The headers for each graphic are color-coded. ETFs rated 4Strong or better have green headings. Those 6Weak or lower have red headings. ETFs that changed rating this week have deep green or red backgrounds. ETFs that strengthened or weakened but did not change rating have light green or red borders.

1.2 Current: Component Stocks Positive vs. Negative Weekly Returns

The following pie charts show the breadth of positive and negative returns for the week for the component stocks of each ETF.

Mixed week though the returns from the weaker ETFs/sectors were relatively worse than the positive effect of the stronger ETFs/sectors.

1.3 Historical: 10 Week Ratings by ETF

Below are 10-week historical strength rating summaries of the ETFs, sorted by ETF - each grouping shows the 10-week ratings change for individual ETFs. This shows the path each ETF has taken over the past 10 weeks to arrive at the current strength rating.

1.4 Historical: 10-Week Ratings by Week

Below are 10-week historical strength rating summaries of the ETFs, sorted by week - each grouping shows one week for all 11 ETFs in newest-to-oldest format. This reveals the weekly strengthening/weakening path of all the ETFs.

2. ETFs Detail

Details for each of the 11 ETFs are provided below. Comments:

The top section shows the strength rating of the sectors comprising each ETF, based on the eight original Stock Market Organizer classifications and NOT the 11 ETF classifications. For example, the XLB Basic Materials ETF consists of 19 Basic Materials stocks, 6 Consumer Goods stocks, and 2 Industrial Goods stocks.

The fully detailed Stock Market Organizer world is comprised of 5 levels: stocks -> sub-industries -> industries -> sectors -> market. The sector definitions do not correspond exactly with those of the SPDR ETFs but for this analysis the ETF stocks are used.

The middle section shows the previous 10 weeks' strengthening and weakening of the relevant sectors. For example, since the XLB has Basic Materials, Consumer Goods, and Industrial Goods stocks, these three sectors are shown in the middle section of the XLB detail. The XLF (Financial) has Financial, Services, and Tech stocks.
The bottom section shows strengthening/weakening for the underlying ETF component stocks, and includes the listing of their Stock Market Organizer industries and sub-industries. These stocks are listed in order based on Sub-industry then strongest to weakest comparative stock strength rating. The Basic Materials XLB ETF includes both Newmont Corporation/NEM in the Gold sub-industry within the Metals & Mining industry and Dow Inc./DOW in the Specialty Chemicals sub-industry within the Chemicals industry.

In these bottom sections, one can visually see the strength/strengthening and weakness/weakening of the component stocks in each ETF.

2.1 XLB Materials (27 stocks, small), Strengthened at 6Weak = tied for WORST

2.2 XLC Communication Services (22 stocks, small), Unchanged at 4Strong

2.3 XLE Energy (22 stocks, small), WEAKENED RATING TO 6Weak = tied for WORST

2.4 XLF Financial (72 stocks, large), STRENGTHENED RATING TO 3Stronger = BEST

2.5 XLI Industrial (76 stocks, large), Unchanged at 5Avg

2.6 XLK Technology (69 stocks, large), Unchanged at 4Strong

2.7 XLP Consumer Staples (38 stocks, mid-sized), STRENGTHENED RATING TO 6Weak = tied for WORST

2.8 XLRE Real Estate (31 stocks, small/mid-sized), Strengthened at 6Weak = tied for WORST

2.9 XLU Utilities (31 stocks, small/mid-sized), Unchanged at 4Strong

2.10 XLV Health Care (61 stocks, large), STRENGTHENED RATING TO 4Strong

2.11 XLY Consumer Discretionary (51 stocks, mid-sized/large), Unchanged at 5Avg

3. Stock Detail

The downloadable PDF below lists all component stocks in order of first Strongest to Weakest ETF and second Strongest to Weakest Stock. The difference between this report and the 11 ETF stock listings above is this report consolidates all component stocks whereas the above listings are segregated by ETF.

SMO SPDR ETF Strength Report Stocks 2025-01-31

SMO SPDR ETF Strength Report Stocks 2025-01-31.pdf

2 MB

Download the following Excel file if you are interested in sorting results yourself.

SMO SPDR ETF Stocks Sortable 2025-01-31

SMO SPDR ETF Stocks Sortable 2025-01-31.xlsx

553 KB