Key Momentum Shifts

  • Technology Remains Leading: Information Technology (XLK) remains the only sector positioned in the Leading quadrant.
  • Industrials Remain Improving: Industrials (XLI) continues to occupy Improving, indicating strengthening relative momentum.
  • Health Care Remains Improving: Health Care (XLV) remains positioned in Improving, with its trajectory continuing to indicate improving momentum.
  • Consumer Discretionary Remains Improving: Consumer Discretionary (XLY) is positioned in Improving, indicating improving momentum while relative strength remains below the Leading area.
  • Seven Sectors Remain Lagging: Communication Services, Energy, Materials, Real Estate, Consumer Staples, Utilities and Financials remain in Lagging.
  • No Sectors in Weakening: The latest RRG shows no sector currently positioned in the Weakening quadrant.
  • Momentum Remains Concentrated: Technology continues to represent the strongest area of relative momentum, while most sectors remain concentrated in Lagging.
  • Improving Group Expands: The presence of Industrials, Health Care and Consumer Discretionary in Improving indicates a developing group of sectors with strengthening momentum.
  • Lagging Group Remains Dominant: Seven sectors remain below both the relative-strength and momentum thresholds.
  • RRG Divergence: The latest chart continues to demonstrate that sector momentum should be assessed through RRG positioning and trajectory rather than short-term price movements alone.

The latest Relative Rotation Graph for 2 October 2026 shows a concentrated momentum structure across US sectors. Information Technology remains the only sector positioned in Leading, while Industrials, Health Care and Consumer Discretionary occupy Improving. Communication Services, Energy, Materials, Real Estate, Consumer Staples, Utilities and Financials remain in Lagging, while no sector is currently positioned in Weakening.

The chart indicates that Technology continues to hold the strongest combination of relative strength and momentum. At the same time, the Improving group has expanded to three sectors, suggesting that relative momentum is strengthening across selected areas of the market. However, the large Lagging group indicates that the improvement has not yet become broad-based across the full sector structure.

Momentum Breakdown by Quadrant

US Sector Relative Momentum Chart at the closing price of 02/10/2026. Powered by: amibroker.com.

Leading Quadrant

Information Technology (XLK) remains the only sector positioned in the Leading quadrant. Its location in the upper-right portion of the RRG indicates relatively strong momentum and relative strength compared with the broader market.

The position of XLK continues to distinguish Technology from the other US sectors. Its location above the horizontal midpoint and to the right of the vertical axis confirms that both relative momentum and relative strength remain positive.

The trajectory remains an important consideration. Continued movement further into the upper-right area would reinforce Technology's Leadership and indicate sustained relative momentum. Conversely, movement back toward the centre of the RRG would suggest that its leadership is beginning to moderate.

Improving Quadrant

Industrials (XLI), Health Care (XLV) and Consumer Discretionary (XLY) are positioned in the Improving quadrant. Their locations above the horizontal midpoint but to the left of the vertical axis indicate improving momentum while relative strength remains below the Leading area.

Industrials continues to demonstrate strengthening relative momentum. Its position suggests that the sector is moving in a favourable direction and could eventually transition into Leading if its trajectory continues toward and across the vertical axis.

Health Care also remains in Improving. Its position indicates that the sector continues to develop stronger momentum relative to the broader market, although it has not yet achieved the relative-strength characteristics associated with Leading.

Consumer Discretionary is also positioned in Improving. Its location in the upper-left area of the RRG indicates that momentum has strengthened, while relative strength remains below the threshold required for Leading.

For all three sectors, continued movement toward the centre and subsequently into the upper-right quadrant would provide stronger confirmation of improving relative strength.

Weakening Quadrant

No sectors are currently positioned in the Weakening quadrant.

This is an important feature of the latest RRG structure. The sectors outside Leading are divided between Improving and Lagging, with no sector currently occupying the area characterised by positive relative strength but deteriorating momentum.

The absence of a Weakening group suggests that the current sector rotation is concentrated around either improving momentum or established relative weakness rather than an intermediate deterioration from leadership.

Lagging Quadrant

Communication Services (XLC), Energy (XLE), Materials (XLB), Real Estate (XLRE), Consumer Staples (XLP), Utilities (XLU) and Financials (XLF) remain in the Lagging quadrant.

This remains the largest concentration of sectors on the RRG. Their positions in the lower-left portion of the chart indicate weak relative momentum and relative strength compared with the broader market.

The key consideration for these sectors is the direction of their trajectories. Movement upward and toward the centre of the RRG would represent an initial improvement in relative momentum. A sustained move through the horizontal midpoint would then provide evidence of a potential transition toward Improving.

Communication Services and Energy remain particularly important to monitor because their eventual movement toward the centre could provide an early indication that the current concentration of Lagging sectors is beginning to diminish.

Bottom Line

The 2 October 2026 US sector Relative Rotation Graph shows Technology as the only sector in Leading, while Industrials, Health Care and Consumer Discretionary occupy Improving. Communication Services, Energy, Materials, Real Estate, Consumer Staples, Utilities and Financials remain in Lagging, with no sectors currently positioned in Weakening.

The most notable feature of the latest chart is the continued concentration of relative strength in Technology alongside an expanding Improving group. Industrials, Health Care and Consumer Discretionary are developing stronger momentum but have not yet achieved the relative strength required to enter Leading.

Overall, Technology remains the principal area of relative strength, while Industrials, Health Care and Consumer Discretionary represent the main areas of improving momentum. The key developments to monitor are whether the Improving sectors can continue moving toward Leading and whether the seven Lagging sectors can establish sustained upward trajectories toward the centre of the RRG.