SMO Exclusive: SPDR Sector ETFs Strength Report Tuesday 2025-03-04 Weakened -0.4 to 5.1 Strength Score

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 Tuesday's 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 - the Market Strength Score and the Sector Risk Gauge, which reflect "Risk OFF" as of Friday, February 21, 2025 - to discern appropriate portfolio exposure and risk/position management given prevailing market and sector conditions. Today the Market Strength Score is -96%, advanced with some room to reach the extreme of -100%. This is not a prediction that it will go to the extreme of -100%, it is simply highlighting where the market is relative to a potential extreme.

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.

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.

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.

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, which is shown below in Section IV. Today's Market Context.

The best and worst are highlighted below:

Best:

• XLRE/Real Estate, 0.1% average for 31 stocks
• XLC/Communications, -1.3% average for 22 stocks
• XLU/Utilities, -1.6% average for 31 stocks

Worst:

• XLK/Technology, -4.6% average for 69 stocks
• XLB/Materials, -4.6% average for 27 stocks
• XLY/Consumer Discretionary, -4.0% average for 51 stocks

High and Low Returns

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

III. Spectrum Graph Analysis

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

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

1. 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).
2. By Type - logically groups the ETFs (for example, interest rate-sensitive, technology-related, consumer-related) for direct comparison with similar ETFs.
3. By Strongest to Weakest
4. 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 Tuesday week-to-week changes compared to the current week.

Current Status: 5.1 Composite Score, Weakened -0.4 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. Below that is a "play" chart (somewhat like a football play diagram) which groups the sectors on a graphic for easy review of what sectors are at what strength ratings and what was their path to arriving at these ratings. This is followed by an Alphabetical spectrum graph.

The ETFs are listed below based on their strength rating.

1Strongest
None

2VeryStrong
None

3Stronger
None

4Strong

• XLRE/Real Estate (Strengthened)
• XLC/Communication (Weakened)
• XLF/Financial (Weakened)
• XLU/Utilities (WEAKENED RATING)

5Average

• XLP/Consumer Staples (Weakened)
• XLV/Health Care (Weakened)
• XLY/Consumer Discretionary (Weakened)

5.1 - Composite Score

6Weak

• XLB/Materials (Weakened)
• XLE/Energy (WEAKENED RATING)
• XLI/Industrial (WEAKENED RATING)
• XLK/Technology (WEAKENED RATING)

7Weaker
None

8VeryWeak
None

9Weakest
None

IV. Today's Market Context

Indexes and ETFs Weekly Performance

Key Headlines

"Trump tells Congress tariffs will be ‘a little disturbance.’ Why it’s more than that, according to economists."
"Canada, Mexico tariff deal could be in works, Lutnick suggests. Here’s what markets will watch."
"Is investing becoming more like gambling? Yes or no? Betting on the new retail trading craze."
"Tesla faces ‘slower growth and rising risk’ among increasing reasons to worry"
"S&P 500 wipes out postelection gains, Nasdaq flirts with correction on tariff fears"
(Marketwatch)

"Trump says he received letter from Zelenskiy saying Ukraine ready for dialogue"
"Stagflation fears bubble up as Trump tariffs take effect and the economy slows"
"JPMorgan traders turn tactically bearish, say economic growth expectations may ‘crater’"
"Crypto seesaws as President Trump’s tariffs take effect: CNBC Crypto World"
"Trump says the U.S. will take control of Greenland ‘one way or the other’"
(CNBC)

"Stock market today: Dow sinks 650 points, S&P 500 wipes out post-election gains as Trump trade war intensifies"
Traders wonder if Trump put is in as Lutnick talks tariff relief"
"Trump's Ukraine pivot fuels 100% gains in world's defense stocks"
"Trump Calls for End to $52 Billion Chips Act Subsidy Program"
"Analysis-Whisper it and it's back: Recession risk creeps onto markets' radar"
(Yahoo!)

Key Current Readings

SP500: 5,778.15
Nasdaq: 18,285.16
Nasdaq 100: 20,352.53
Russell 2000: 2,079.53
10Y Treasury: 4.233%
2YT: 3.955%
Oil (WTI Crude): $67.68
Bitcoin: $86,988.31
Dollar Index: 105.53
Gold: $2,929.4
VIX: 23.51
(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 week just ended, as follows:

1. 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
2. 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
3. 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

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.

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:

1. 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.

2. 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.
3. 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), Weakened at 6Weak = tied for WORST

2.2 XLC Communication Services (22 stocks, small), Weakened at 4Strong = tied for BEST

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

2.4 XLF Financial (72 stocks, large), Weakened at 4Strong = tied for BEST

2.5 XLI Industrial (76 stocks, large), WEAKENED RATING TO 6Weak = tied for WORST

2.6 XLK Technology (69 stocks, large), WEAKENED RATING TO 6Weak = tied for WORST

2.7 XLP Consumer Staples (38 stocks, mid-sized), Weakened at 5Avg

2.8 XLRE Real Estate (31 stocks, small/mid-sized), Strengthened at 4Strong = tied for BEST

2.9 XLU Utilities (31 stocks, small/mid-sized), WEAKENED RATING TO 4Strong = tied for BEST

2.10 XLV Health Care (61 stocks, large), Weakened at 5Avg

2.11 XLY Consumer Discretionary (51 stocks, mid-sized/large), Weakened 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.

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