5 sectors are rotating · 6 stable
Five of eleven S&P 500 sectors flipped their year-ago relative-strength sign this window, and the direction is a clean risk-on rotation: Energy and Financials swung into leadership, while Utilities, Technology and Industrials swung out. Energy is the standout — XLE outperformed SPY by roughly 11.6 percentage points over the last 30 days after trailing by 1.7pp in the same July 2025 window, a 13.3pp swing driven by crude firming and the 10-day money-flow proxy putting nearly $10B of net dollar inflow into XLE alone. The single most surprising rotation is not Energy but Utilities: XLU led SPY by more than five points a year ago and now trails by more than three, with negative money flow across every ETF in the group. The tape is quietly repricing a defensive-leadership regime back into a cyclical one.
Communication Services and Consumer Discretionary sit roughly where they did a year ago and are the only two sectors whose relative-strength delta is below one point. Health Care, Staples and Materials all still lag SPY but by less than they did in 2025, so they are not rotating in either direction — they are simply less bad. Real Estate technically flipped from a -1.4pp lag to a +0.6pp lead, but the 1.9pp magnitude is below the 2.0pp threshold this routine treats as noise, so it is left off the rotating list.
Energy
XLEEnergy went from the worst-performing rotating candidate a year ago to the best sector this window by a wide margin — a 13.3pp swing in relative strength. All five liquid sector ETFs are up double digits over the 30 days, led by pure E&P names (XOP +14.7%) with cap-weighted majors close behind. The signal is a supply-side repricing, not a demand story: the flow is concentrated in the majors-heavy XLE and VDE rather than in the higher-beta services group, which is what you see when the tape is buying reserves and cash flow rather than drilling activity. Money flow into XLE alone was near $10B over 10 trading days, an outsized share of the sector total.