Defensive Sectors Lag as the S&P 500 Rockets
When the S&P 500 jumps more than 4% in a single week, defensive sectors such as utilities and consumer staples often fall behind. The big question is whether the top five sectors will turn more aggressive or if the market will calm down.
Changes in the Top Five Sectors
Only a few spots moved this week. Energy stayed on top, followed by Materials and Industrials. Utilities moved up one spot, while Real Estate entered the top five, pushing Consumer Staples down.
- 1️⃣ Energy (XLE)
- 2️⃣ Materials (XLB)
- 3️⃣ Industrials (XLI)
- 4️⃣ Utilities (XLU)
- 5️⃣ Real Estate (XLRE)
Other sectors fell lower: Consumer Staples slipped to sixth, Technology rose to seventh, Communication Services held eighth, Health Care fell to ninth, Financials to tenth, and Consumer Discretionary to eleventh.
Weekly Relative Rotation Graph (RRG)
All five leading sectors sit in the "leading" quadrant, but their momentum is slowing. The relative strength (RS) numbers stay high, meaning the underlying trend is still healthy.
In the lagging quadrant, Technology is beginning to pick up speed, while Communication Services is the only sector edging closer to the leaders.
Daily RRG Snapshot
Looking at the daily chart, the picture changes. All five sectors are drifting toward—or already inside—the lagging quadrant. Industrials and Real Estate sit near the chart’s centre, meaning they move in line with the overall market. Utilities and Energy face the biggest short‑term pressure.
Even with these moves, the weekly view suggests the dip may be temporary. Utilities and Energy still have room to swing back into leadership.
Sector Highlights
Energy
Energy’s price and RS are slipping, yet the sector is still in an overall uptrend. Both RRG lines stay above 100, keeping Energy in the leading quadrant. A new low on price and RS could set up the next rise.
Materials
After touching a support level near 46, Materials is climbing back toward its previous peak around 54. The RS line has flattened, but the RS‑ratio stays very high, indicating strong underlying strength.
Industrials
Industrials is back inside its upward channel and close to its former high just below 180. The RS line rests on a key support level; holding there will keep relative strength positive.
Utilities
Utilities continues to move within its rising channel, trading flat for a few days. The RS line bounced off resistance, causing the RS momentum line to roll over, but RRG lines stay above 100.
Real Estate
Real Estate entered the top five after breaking above resistance at 44. The RS line is climbing, and RRG lines are now above 100, confirming a solid rebound.
Portfolio Impact
The S&P 500’s rapid 10% rise in just 13 trading days has outpaced most trend‑following strategies. Defensive portfolios have lagged, and it may take time for sector weights to catch up with the market’s fast pace.
Even though the top five sectors have steadied, they still trail the index by more than 10% in both cap‑weighted and equal‑weighted versions. The long‑term record shows this approach can beat the S&P 500, but the current environment is tough. The strategy stays in place while we watch for signs that a change might be needed.
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