Sector Rotation & The Economic Cycle
Sector rotation theory suggests that different market sectors outperform during specific phases of the economic cycle. While past performance does not guarantee future results, this framework is widely used by institutional investors for asset allocation.
1. Early Recovery
- Financials
- Real Estate
- Consumer Discretionary
2. Mid Cycle
- Information Technology
- Communication Services
- Industrials
3. Late Cycle
- Energy
- Materials
- Health Care
4. Recession
- Consumer Staples
- Utilities
- Health Care
Methodology & FAQ
What ETFs represent the sectors?
We use the State Street Global Advisors (SSGA) Select Sector SPDR ETFs as proxies for the 11 GICS (Global Industry Classification Standard) sectors of the S&P 500. For example, XLK for Technology, XLV for Health Care, etc.
How is Relative Strength calculated?
Relative strength measures the 1-year total return of a sector ETF minus the 1-year total return of the SPDR S&P 500 ETF Trust (SPY). A positive number indicates the sector has outperformed the broader market over the trailing 12 months.
How frequently is this data updated?
The dashboard fetches fresh market data during standard market hours. P/E ratios and dividend yields are based on trailing twelve month (TTM) figures provided by Yahoo Finance.