SECTOR ROTATION · MARKET REGIME
What is the market pricing in right now?
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Regime Spread — how did we get here? (last ~1 year)
Not sure what you're looking at? See how the Regime Spread is calculated ↓
Shaded bands are the five regime buckets (±1% and ±5% thresholds — matching the labels on the current-regime card above). The dot on the right is today. Watch the direction: drifting down through zero means the tape is quietly getting more defensive; crossing back up means growth names are catching a bid again.
What's driving the reading? — each sector's 3M return
Cyclicals —
Defensives —
Sector performance grid
Leaders — last 3 months
Laggards — last 3 months
Risk-on / risk-off proxy: XLY ÷ XLP
When investors are optimistic they buy discretionary (cars, restaurants, Amazon); when they’re defensive they buy staples (food, soap, utilities). This ratio going up = risk-on. Falling = risk-off.
How the Regime Spread is calculated
We take 9 of the 11 S&P sector ETFs and split them into two camps by how they behave when the economy is expected to grow or shrink:
Five cyclicals — do well when investors expect growth: XLKTechnology, XLFFinancials, XLIIndustrials, XLYConsumer Discretionary, XLCCommunication Services.
Four defensives — hold up when investors get nervous: XLVHealth Care, XLPConsumer Staples, XLUUtilities, XLREReal Estate.
Energy (XLE) and Materials (XLB) sit out — they trade on commodity prices more than on growth expectations, so we don't count them in either camp.
For each of those 9 ETFs we measure the total return over the last 3 months (63 trading days). Average the five cyclicals, average the four defensives, subtract. The result is the blue line on the regime-history chart: average cyclical 3M return − average defensive 3M return. A positive number means growth-sensitive names are beating the defensive ones (bullish rotation). A negative number means the opposite — money is hiding in food, soap, utilities, and health care.