The Best Five Sectors This Week #76/77

After 77 consistent episodes, I missed my first one last week due to travel commitments. I was in San Francisco presenting at the annual conference of the Technical Securities Analysts Association of San Francisco (TSAA-SF), and then spent the weekend in Seattle before arriving at the StockCharts Redmond office this week.

Over the past two weeks, the S&P 500 experienced modest movement. In the week beginning July 20, the index picked up 0.8%; it then lost 1% last week, resulting in a small loss over the two-week period.

Episode 76 brought some notable changes among the top five sectors:

• Technology held onto the number one spot.
• Energy made a significant leap from sixth to second place, entering the top five.
• Financials slipped from second to third.
• Real Estate climbed from fifth to fourth.
• Health Care dropped from fourth to fifth.

In the lower half of the rankings:

• Industrials fell from third to sixth.
• Utilities moved up from eighth to seventh.
• Consumer Staples dropped from seventh to eighth.
• Materials, Consumer Discretionary, and Communication Services remained steady at ninth, tenth, and eleventh, respectively

07/27/2026 #76

1. (1) Technology - XLK [57%]
2. (6) Energy - XLE [5%]*
3. (2) Financials - XLF [21%]*
4. (5) Real Estate - XLRE [3%]*
5. (4) Health Care - XLV [14%]*
6. (3) Industrials - XLI*
7. (8) Utilities - XLU*
8. (7) Consumer Staples - XLP*
9. (9) Materials - XLB
10. (10) Consumer Discretionary - XLY
11. (11) Communication Services - XLC

In episode 77, the top five sectors—Technology, Energy, Financials, Real Estate, and Health Care—maintained their positions. In the bottom half, Industrials stayed at six, Consumer Staples moved up to seven, Materials rose to eight, and Utilities slipped to nine. Consumer Discretionary and Communication Services held steady at ten and eleven.

08/03/2026 #77

1. (1) Technology - XLK [57%]
2. (2) Energy - XLE [5%]
3. (3) Financials - XLF [21%]
4. (4) Real Estate - XLRE [3%]
5. (5) Health Care - XLV [14%]
6. (6) Industrials - XLI
7. (8) Consumer Staples - XLP*
8. (9) Materials - XLB*
9. (7) Utilities - XLU*
10. (10) Consumer Discretionary - XLY
11. (11) Communication Services - XLC

RRG Analysis: Weekly and Daily Trends

On the weekly RRG, technology is still the only sector on the right-hand side, rotating into the lagging quadrant. On the left, Health Care and Financials are in the improving quadrant, continuing their positive rotation toward leading. Real Estate and Energy are in the lagging quadrant, but real estate is close to crossing into improving, and energy is starting to gain relative momentum.

On the daily RRG, Energy stands out with a strong rotation into leading, which pushed the sector into the top five, holding at number two. Energy has rotated from lagging through improving and into leading; it is now the strongest sector on the daily RRG, despite losing some relative momentum recently. Real Estate, Health Care, and Financials are all in the leading quadrant but have turned downward, signaling a need for attention as their momentum shifts.

Sector Highlights

Technology

Technology remains the leading sector in the top five portfolio. On the daily RRG, we can see a rapid rotation back up inside the lagging quadrant. The price chart for Technology reveals a solid breakout from a two-month consolidation pattern, suggesting further gains. The raw RS line is forming a higher low, a positive sign, even as the RRG lines point lower due to the rapid improvement. The weekly RRG lines will likely adjust in time.

Energy

The sector is pushing against a falling resistance line, which now has three touch points, making it a reliable trend line. A parallel line at the bottom indicates a consolidation pattern after a breakout from the broad range seen from 2023 to 2025, with the breakout at the start of 2026. A move above $60 would be a positive sign, likely leading to further gains and improvement in the raw RS line. The RS momentum line has already turned up, starting to pull the RS-ratio line higher.

Financials

XLF broke above its previous high and is holding up well. The RS line is peaking against former support, now resistance, but the price breakout should push the raw RS line higher. Both RRG lines are pointing up, with RS-momentum solidly above 100 and RS-ratio nearly above 100, which would move the tail back into the leading quadrant.

Real Estate

The sector continues to struggle with overhead resistance, having peaked around 46 and now back below 45.50. The raw RS line shows a narrow trading range, but the RRG lines have picked up some positivity as the relative strength line moves sideways after a long downtrend.

Health Care

Healthcare is holding up well after breaking above resistance just below 160. The downtrend in relative strength is slowing down but has not turned up yet. But the RRG lines suggest improvement, with RS-momentum well above 100 and starting to pull the RS-ratio line higher.

Portfolio Performance and Outlook

The top five portfolio lost about 1% in the first week and gained it back in the second, resulting in little net change. The portfolio remains just over 8% behind the S&P 500. Financials and healthcare are currently strong performers, and energy may be an outlier contributing to performance. From a sector rotation perspective, the portfolio appears well-positioned to catch up with the S&P 500 and, hopefully, surpass it in the future.

#StayAlert, -Julius