Key Highlights

  • Energy (XLE) remains firmly in the Leading quadrant and continues to exhibit the strongest combination of relative strength and momentum across the US market.
  • Real Estate (XLRE) and Communication Services (XLC) remain in the Leading quadrant, reinforcing their positions as key market leaders.
  • Consumer Staples (XLP) continues to strengthen within the Improving quadrant, while Utilities (XLU) has also rotated into Improving, signalling strengthening relative momentum.
  • Financials (XLF) and Health Care (XLV) remain in the Weakening quadrant, indicating leadership continues to moderate despite maintaining above-average relative strength.
  • Technology (XLK), Materials (XLB), Industrials (XLI), and Consumer Discretionary (XLY) continue to occupy the Lagging quadrant, reflecting persistent relative underperformance.
  • The latest sector rotation suggests leadership remains concentrated in Energy, Real Estate, and Communication Services, while defensive sectors continue to gain momentum.

The latest Relative Rotation Graph (RRG) for 24 July 2026 highlights continued strength among the US market's leading sectors. Energy remains the dominant leader, while Real Estate and Communication Services continue to exhibit superior relative strength despite some moderation in momentum. Meanwhile, Consumer Staples and Utilities continue improving, suggesting defensive sectors are attracting increasing investor interest. In contrast, Financials and Health Care remain in Weakening, while Technology and several cyclical sectors continue to lag the broader market. Overall, sector rotation remains selective, favouring sectors demonstrating improving momentum and sustained relative strength.

US Sector Relative Momentum Chart (at the closing price of 24/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XLE) remains the strongest momentum sector in the US market. Its position deep within the Leading quadrant confirms that both relative strength and momentum remain firmly positive, indicating sustained institutional demand for energy-related companies. Although its trajectory has begun to flatten slightly, the sector continues to exhibit the strongest leadership characteristics across the market.
  • Real Estate (XLRE) remains firmly positioned within the Leading quadrant. The sector continues strengthening following its recent rotation out of Improving, reflecting increasing investor confidence in property-related companies and reinforcing its role as one of the market's primary leadership sectors.
  • Communication Services (XLC) continues to reside within the Leading quadrant. While its south-easterly trajectory suggests momentum has moderated from earlier peaks, the sector continues to display above-average relative strength and remains one of the market's leading industries.

Improving Quadrant

  • Consumer Staples (XLP) remains firmly positioned within the Improving quadrant and continues strengthening. The sustained improvement in relative momentum suggests investors are steadily increasing exposure to defensive consumer companies, positioning the sector as a strong candidate to rotate into Leadership if current trends persist.
  • Utilities (XLU) has moved into the Improving quadrant after previously residing in Lagging. The north-easterly trajectory indicates strengthening relative momentum and suggests downside pressure has eased, improving the sector's medium-term outlook.

Weakening Quadrant

  • Financials (XLF) remain within the Weakening quadrant. Although relative strength continues to outperform much of the broader market, declining momentum suggests the sector may require further consolidation before leadership resumes.
  • Health Care (XLV) continues to occupy the Weakening quadrant. While recent price action has stabilised, the sector continues to lose relative momentum, indicating investors remain focused on industries exhibiting stronger leadership characteristics.

Lagging Quadrant

  • Technology (XLK) remains in the Lagging quadrant despite showing signs of stabilisation. Additional improvement in both relative strength and momentum will be required before the sector can rotate into Improving.
  • Materials (XLB) continue to reside within the Lagging quadrant. Although recent momentum has improved modestly, the sector continues to underperform the market's leading groups.
  • Industrials (XLI) remain in Lagging, reflecting persistent relative weakness despite showing early signs of stabilisation in momentum.
  • Consumer Discretionary (XLY) also remains within the Lagging quadrant. While downside momentum has moderated, the sector continues to trail the broader market in terms of relative performance.

Strategic Summary

The latest Relative Rotation Graph confirms that Energy (XLE) remains the dominant leadership sector within the US market, supported by exceptional relative strength and sustained momentum. Real Estate (XLRE) and Communication Services (XLC) continue to reinforce the Leading quadrant, while Consumer Staples (XLP) and Utilities (XLU) are strengthening within Improving, suggesting defensive sectors are gradually assuming a larger leadership role.

Conversely, Financials (XLF) and Health Care (XLV) continue to lose momentum within the Weakening quadrant. Technology (XLK), Materials (XLB), Industrials (XLI), and Consumer Discretionary (XLY) remain in Lagging, highlighting continued relative underperformance. Overall, the latest sector rotation suggests investors continue favouring sectors exhibiting strengthening momentum while remaining cautious towards industries that have yet to establish improving leadership characteristics.