The Sector Heat Pulse tracks ETF rotation across 11 key sectors, showing which parts of the market are leading or lagging relative to SPY.
🎯 What is Sector Rotation?
Market capital constantly flows between sectors based on economic conditions:
• Risk-On: Money flows into Tech (XLK), Discretionary (XLY), Financials (XLF)
• Risk-Off: Money flows into Utilities (XLU), Staples (XLP), Healthcare (XLV)
• Inflation Hedge: Energy (XLE), Materials (XLB)
• Rate Sensitive: Real Estate (XLRE) drops when rates rise
Understanding which sectors are hot/cold helps you pick stocks aligned with institutional flow.
📊 How to Read the Cards
Each sector shows:
✅ % Change - Daily performance vs previous close
✅ vs SPY - Relative strength (+1.2% means outperforming SPY by 1.2%)
✅ Color Coding:
• Green = Outperforming (strong sectors, buy stocks here)
• Red = Underperforming (weak sectors, avoid or short)
• Gray = Neutral/Inline with SPY
⚠️ Trading Sector Rotation
STEP 1: Identify Leading Sectors
• Look for sectors with +0.5% or more vs SPY
• Confirm trend: Is this sector hot for multiple days?
• Cross-check with macro conditions (Fed policy, GDP, inflation)
STEP 2: Find Stocks in Hot Sectors
• Use Top Movers widget to find individual stocks in leading sectors
• Check Trade Synthesizer for stocks with sector + momentum alignment
• Avoid lagging stocks even in hot sectors (stock-specific risk)
STEP 3: Risk Management
• Don't fight sector trends—avoid LONG in lagging sectors
• If SPY is green but your sector is red, you're swimming upstream
• Sector rotation can reverse quickly on news (Fed, earnings, geopolitics)
🔄 Sector ETFs Tracked
• XLK (Technology): Apple, Microsoft, Nvidia—growth & innovation
• XLF (Financials): Banks, insurance—sensitive to interest rates
• XLE (Energy): Oil & gas—inflation hedge, commodity play
• XLV (Healthcare): Pharma, biotech—defensive, less volatile
• XLY (Consumer Discretionary): Amazon, Tesla—consumer spending
• XLP (Consumer Staples): Walmart, P&G—defensive, recession-resistant
• XLI (Industrials): Boeing, Caterpillar—economic growth play
• XLU (Utilities): Power, water—safest sector, low volatility
• XLB (Materials): Mining, chemicals—commodity & construction
• XLRE (Real Estate): REITs—rate sensitive, dividend income
• XLC (Communication): Meta, Google—advertising & media
💎 Pro Trading Strategies
✅ Rotation Play: When Tech (XLK) is hot, look for NVDA, AMD, MSFT trades
✅ Divergence Play: If SPY is green but Financials (XLF) is red → banks in trouble
✅ Macro Confirmation: Fed hawkish + Utilities (XLU) rising = fear trade
✅ Multi-Sector Alignment: If Tech + Discretionary + Financials all green = strong risk-on
❌ Avoid: Picking stocks in sectors underperforming by -1% or more vs SPY
💡 Quick Start: Check Sector Heat Pulse every morning at 9:45am (after opening volatility settles). If you see a sector with +1% vs SPY or more, prioritize stocks in that sector for your watchlist.
🎥 Video Tutorial Coming Soon