It’s the start of 2025, and a fresh approach to Relative Rotation Graphs (RRG) is being explored with a concrete, rules-based objective: transform weekly and daily RRG signals into a single, objective ranking for the 11 SPDR sector ETFs, identify the top five sectors, and construct a portfolio that weights those sectors at 20% each. This article lays out the foundation of that effort, the rationales behind it, the methodological blueprint, and the initial sector-by-sector observations as 2025 begins. The aim is to move beyond asking what RRG can visualize to building a reproducible, testable framework that can be tracked weekly, with the intention of sharing outcomes publicly on a regular cadence.
Understanding Relative Rotation Graphs and the Track Record Question
Relative Rotation Graphs, since their inception in 2011, have sparked ongoing dialogue about how to evaluate performance and reliability. The fundamental question that has persisted among practitioners and readers alike is deceptively simple: what is the track record for RRG? The conventional answer, rooted in the very nature of RRG, is nuanced: there is no single track record for RRG because there is not one fixed set of rules that governs its application across all markets, timeframes, and risk tolerances. In practice, RRGs are primarily a data visualization tool designed to reveal the rotational relationships between asset classes, sectors, or markets over time. They offer a visual map of relative strength and momentum, enabling traders to observe shifts in leadership and to infer potential transitions in trend or risk appetite.
This opens up a broader methodological discussion. If RRGs are visualization systems rather than fixed trading systems, can one nonetheless derive useful, repeatable trading rules from them? The answer is that while RRGs themselves do not prescribe a single set of immutable rules, it is possible to formulate a framework that tests and repeats certain conditions. In other words, a quantitative and rules-based approach can be anchored in RRG data, provided that the rules are explicitly defined and consistently applied. The distinction is critical: the charts are tools to perceive structure; the rules are the explicit criteria used to decide when to act on that structure. Over the years, there has been ongoing experimentation—"playing around" with different approaches—to arrive at a version that can operate objectively. The pursuit is not to claim certainty where there is uncertainty but to seek a disciplined, transparent methodology that translates RRG insights into testable signals.
The author’s recent trajectory has been to explore several approaches that might yield an operational framework without erasing the fundamental value of RRG as a visualization device. This experimental path is described as a work in progress, acknowledging that progress hinges on a balance between preserving the interpretive strengths of RRG and introducing a reproducible set of criteria that can be applied on a weekly basis. The plan for 2025—ambitious in scope but clear in purpose—is to share the outcomes of Version 1 of this approach, focusing on the 11 SPDR sector ETFs, in a weekly blog post. The central idea is not merely to document what happened in any given week but to systematically observe how an aggregated, multi-point metric can rank sectors and illuminate potential opportunities.
A core premise of this plan is the recognition that a ranking system—based on combining diverse data points from weekly and daily RRG observations—can identify the "best five sectors" at any point in time. This ranking is intended to provide a pragmatic basis for portfolio construction, with an explicit policy: allocate 20% to each of the five top-ranked sectors. The objective is to maintain a disciplined, rules-driven approach to sector allocation that can be monitored, evaluated, and refined as more data accumulate. Importantly, the intention is not to claim a perfected, final product at the outset but to lay the groundwork for a process that can be iterated, tested, and improved over time.
In the early phase of 2025, the plan is to publish a concise weekly list of the best five sectors based on the combined metric and to document the hypothetical performance of a portfolio built on the five sectors at a fixed 20% weight. This approach emphasizes transparency about the mechanics of ranking and weighting, while also acknowledging that the full transparency of every parametric detail may be limited in the initial version. The overarching goal remains the same: translate RRG-derived signals into a transparent, repeatable framework that can be tracked over time, enabling readers and investors to observe how the system evolves and whether it delivers meaningful, actionable insights.
This discussion of track records and rules-based testing should be understood as a clarifying step. It does not claim that RRGs will always predict or outperform; rather, it acknowledges that, through careful construction of criteria and disciplined application, one can extract repeatable patterns from RRG data. The broader message is one of cautious optimism: while RRGs are a powerful visualization tool, their true value in a systematic investment approach emerges when the signals are translated into explicit, testable rules and when those rules are applied consistently over time. In 2025, the project moves from a conceptual stance toward a practical, iterative, and publishable framework that invites ongoing evaluation and refinement.
The Roadmap Toward Version 1 in 2025
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The project centers on the 11 SPDR sector ETFs, chosen for their breadth, liquidity, and representative exposure to major market sectors.
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A single, composite metric will be developed by aggregating various weekly and daily RRG data points. This composite will then be used to rank the sectors.
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The ranking will identify the top five sectors at any given time, with the portfolio constructed by allocating 20% to each of these five sectors.
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The methodology emphasizes transparency about the principles behind the ranking and the weighting scheme, while recognizing that not every methodological detail may be disclosed initially to avoid premature productization.
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Published updates will occur on a weekly basis, documenting the outcomes and tracking performance of the five-sector, 20% weight portfolio.
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The overarching aim is to establish a repeatable, testable process that evolves with new data, insights, and refinements, with the ultimate goal of delivering a robust, investable product in due course.
This structured approach is grounded in a belief that RRGs offer deep insights into rotation and momentum but require a carefully designed, rules-based framework to translate those insights into investable decisions. The 2025 plan reflects a balanced commitment to openness about the process while maintaining prudent boundaries around the disclosure of every technical nuance in the early stages of Version 1.
In sum, the core message is that RRGs are a powerful visualization tool, but their true potential—as part of a systematic, repeatable investment process—comes from turning qualitative signals into quantitative rules and tracking their performance over time. The 2025 initiative seeks to demonstrate that transformation by applying a transparent, disciplined approach to a well-defined set of sector ETFs and by sharing weekly results that reveal how the method behaves in practice.
The 2025 Mission: From Visualization to a Quantitative Rules-Based System
The 2025 mission is anchored in three pillars: (1) preserving the interpretive strengths of Relative Rotation Graphs as a visualization tool, (2) creating a pragmatic, rules-based framework that can be tested and repeated, and (3) deploying this framework on a fixed universe of 11 SPDR sector ETFs to generate an objective ranking of sectors that informs a disciplined portfolio approach.
A core objective is to move beyond purely descriptive charts toward a reproducible decision-making process. This means articulating explicit criteria for how weekly and daily RRG data points are combined, how the composite score is computed, and how the resulting rank translates into a concrete 20% position for each of the top five sectors. The intent is to balance the richness of RRG-derived insight with the rigor of a structured framework that can be audited, adjusted, and improved as new data and feedback come in.
The weekly cadence plays a central role in ensuring that the method remains current and relevant. By publishing the list of the top five sectors each week, the approach maintains visibility into how dynamic rotations in the market environment influence sector leadership. The weekly publication also serves as a continuous feedback loop, allowing practitioners to observe whether the rankings align with actual market performance and whether the 20% weight allocation to the top five sectors yields the intended risk-reward profile over time.
This framework does not claim to be infallible or to guarantee profits in every market regime. Instead, it emphasizes disciplined discipline and methodological transparency. The process is designed to facilitate ongoing learning, enabling the reader to observe how the ranking, the allocations, and the resulting portfolio performance evolve as market dynamics change. The goal is to create a robust, testable, and scalable method that can be refined through iterative improvements and real-world experience.
Weekly Publication and Trackable Outcomes
The weekly publication is the backbone of the process. Each week, the ranking will be presented along with a narrative that explains the rationale behind the positions and how the composite metric behaved during the period under review. The track record, in turn, will be built not merely on portfolio returns but on the consistency of the ranking signals, the stability of the 20% allocations across market regimes, and the clarity with which the method’s outcomes can be interpreted and evaluated. Over time, readers will be able to compare the weekly signals with actual market moves, assess the alignment or discrepancy between predicted sector leadership and realized performance, and judge whether the approach improves decision-making relative to a baseline.
The 11 SPDR Sector ETFs as the Investment Universe
The choice of the 11 SPDR sector ETFs reflects a deliberate strategy to capture a comprehensive view of broad market sectors. These ETFs cover the spectrum of cyclical and defensive exposures across the market, providing a diversified framework for evaluating sector rotations and strength. The sector universe is large enough to provide meaningful rotation signals, yet constrained enough to be managed with clarity and focus. This balance is essential for constructing a robust, repeatable process that can be explained and implemented consistently.
The Best Five Sectors and a 20% Weight Policy
By design, the framework seeks to identify the five sectors that exhibit the strongest combination of weekly rotation and daily momentum signals. Once those sectors are identified, each receives a 20% allocation, creating a five-way, equal-weighted exposure. This fixed allocation simplifies risk management, reduces the potential bias from trying to time position sizing, and provides a transparent, easy-to-track structure for performance measurement. The fixed 20% allocation is not an investment guarantee; rather, it’s a methodological choice grounded in a simple, scalable approach that makes performance attribution more straightforward.
A Statement on Disclosure and Iterative Improvement
It is acknowledged that not all details of the methodology may be disclosed initially. The rationale for this restraint is to avoid premature commercialization of a developing system and to protect the integrity of the ongoing research. However, there is a commitment to transparency about the guiding principles, the logic behind the ranking, and the observed results. The process invites feedback and critical examination, and it is designed to adapt as insights emerge. The overarching objective remains clear: to move from a visualization tool to a credible, evidence-based framework that can be continuously refined through testing, observation, and iteration.
Overall, the 2025 mission embodies a pragmatic blend of respect for RRG’s strengths as a visualization method and a rigorous effort to convert insights into a structured, repeatable investing process. The result should be a publicly trackable, weekly narrative about sector leadership, a disciplined portfolio schema, and an evolving methodology that grows in robustness as more data become available and the model is stress-tested across different market environments.
Methodology: Data, Metrics, and the One-MMetric Ranking System
Central to Version 1 is the idea of synthesizing multiple data points from weekly and daily RRG analyses into a single, interpretable metric. This one-metric framework is designed to generate a transparent ranking of the 11 SPDR sector ETFs, reflecting a holistic view of relative performance, momentum, and rotation signals. The approach is intentionally integrative: rather than relying on a single indicator, it weaves together several signals that, cumulatively, help identify sectors positioned to lead or lag in the near term. The process emphasizes consistency, repeatability, and clarity in interpretation, with results that can be observed, tested, and understood by readers who follow the weekly updates.
In practical terms, the methodology involves the following elements:
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Data inputs: Weekly RRG coordinates, daily RRG coordinates, and potentially derived momentum indicators that are encapsulated within the RRG framework. These inputs capture relative strength vs. a benchmark and the speed at which rotations occur.
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Signal synthesis: The diverse data points are combined into a single composite signal. The nature of this combination—whether it’s a weighted average, rank aggregation, or another principled method—will be specified in the Version 1 framework. The objective is to reflect both the magnitude of rotation and the persistence of strength.
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Sector ranking: The composite signal is used to produce a rank order across the 11 sectors, from strongest to weakest, in terms of their current rotational and momentum attributes. The ranking serves as the basis for selecting the top five sectors.
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Portfolio construction: The top five sectors receive a fixed 20% allocation each, resulting in a five-hold portfolio that is rebalanced on a weekly cadence to reflect shifts in the ranking.
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Evaluation and feedback: The weekly publication will include a narrative describing how the composite metric behaved, how sectors moved in ranking, and how the ensuing portfolio allocation would have performed. The emphasis is on learning and refinement rather than claiming a perfected rule-set from the outset.
Rationale for a Composite Metric
RRGs inherently capture multi-dimensional dynamics. A single metric that aggregates weekly and daily signals can help readers to see a coherent story: which sectors are strengthening in relative performance, where momentum supports a continuation of leadership, and where rotation is signaling potential regime changes. The composite metric is designed to preserve these narratives while providing a concrete, actionable allocation framework. The goal is not to erase the informational richness of RRGs but to provide a tangible decision tool that can be documented, tested, and evolved.
Transparency and Evolvability
A key design principle for Version 1 is evolvability. The approach is deliberately transparent about the intent to disclose the guiding ideas and outcomes while deferring some technical nuances to subsequent versions. This ensures that readers can understand the logic, follow the reasoning, and observe the results without being overwhelmed by complex, opaque formulas. As Version 1 matures with more data and feedback, additional details can be introduced, clarified, and, when appropriate, codified into a more formal specification.
Practical Implementation Notes
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The foundational universe comprises 11 SPDR sectors, selected for breadth and liquidity.
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The time horizons leveraged are weekly and daily, recognizing that rotation patterns can unfold over different speeds and durations.
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The end product is a weekly list of the top five sectors, a 20% weight allocation to each, and a narrative explaining the underlying signals.
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The process is designed to be reproducible, enabling other practitioners to replicate the approach using the same inputs and rules, subject to any necessary parameter disclosures.
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The ongoing objective is to monitor, assess, and refine the framework as more data become available, with the potential for productization or broader dissemination at a later stage, should the results prove robust.
In short, the methodology of Version 1 is to translate the rich, qualitative signals of Relative Rotation Graphs into a disciplined, quantum of decision-making. The composite metric aims to reflect both the direction and the strength of rotations in a way that is interpretable and actionable. The weekly publication cadence ensures that the system remains responsive to changing market conditions while providing a platform for continuous evaluation. The emphasis remains on objectivity, clarity, and a transparent process that readers can observe, critique, and learn from as the project evolves.
The 11 SPDR Sector ETFs and the Initial Portfolio
The early stage of 2025 centers on establishing the investment universe and the initial portfolio configuration to test Version 1 of the approach. The focus is the 11 SPDR sector ETFs, a diversified set designed to represent broad sector exposure across the market. The objective is to create a ranking framework that identifies the best five sectors; those sectors then receive a uniform 20% allocation to form a five-sector portfolio. This structure—rank, select, allocate—provides a straightforward path for performance attribution and ongoing evaluation.
The rationale for selecting SPDR sector ETFs includes liquidity, tradability, and sector coverage. These are among the most widely traded sector instruments, offering reliable data streams and enough price action to study rotation patterns. The decision to use 11 sectors, rather than a smaller subset, aims to preserve the richness of sector dynamics and to reduce risk of omitting meaningful rotations that may only appear when observing a broader market universe.
The Start-Of-Year Snapshot: 2025
As the calendar turned to 2025, the plan called for compiling a list of the sectors that would constitute the initial portfolio under Version 1. The five sectors chosen would be those ranked highest by the composite metric, reflecting the strongest combination of weekly rotation and daily momentum signals at that starting point. Each of these five sectors would be assigned a 20% weight, resulting in a balanced, equal-weighted portfolio across the top performers.
The sequence of events begins with the calculation of the composite metric from the pooled RRG data. Once the top five sectors are identified, the portfolio is built by allocating 20% to each. This initial construction serves not only as a test of the methodology but also as a starting point for the ongoing weekly evaluation. Readers are invited to observe how the ranking evolves, how sector leadership shifts, and how the portfolio allocation changes in the subsequent weeks as new data are incorporated.
Sector Tickers and Snapshot Observations
The sector universe is represented by the following tickers, which are widely recognized in market practice:
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XLY: Consumer Discretionary
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XLC: Communication Services
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XLF: Financials
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XLK: Technology
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XLI: Industrials
These five tickers are discussed in detail below, with observations that analogize to their initial performance signals at the start of the year. The analysis emphasizes relative strength, momentum, and potential support or resistance levels as interpreted within the RRG framework.
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Consumer Discretionary (XLY): The sector is observed to be holding up well after an upward break. The area around 210 is highlighted as a potential support level in case of a pullback, with relative strength continuing to show strong positive momentum.
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Communication Services (XLC): The sector is testing the former rising resistance line, now acting as support. The relative strength metric appears to have broken out of its trading range and seems to be moving higher, signaling ongoing leadership potential.
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Financials (XLF): The rhythm of higher highs and higher lows remains intact on the price chart. Relative strength is currently testing the upper boundary of the former trading range, acting as support and suggesting continued resilience.
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Technology (XLK): The sector continues to wrestle with overhead resistance around the 240 area. Despite resistance, there is no material price drop observed, and relative strength remains within the boundaries of its trading range, indicating a possible consolidation phase rather than a clear break to the downside.
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Industrials (XLI): The sector is testing a rising support line, and as long as this support holds, the outlook remains positive. The relative strength story shows why Industrials is identified as the fifth sector in this initial ranking. A small double top pattern has completed, hinting at potential weakness ahead, but with caveats pending further confirmation.
These sector-level notes provide a framework for interpreting early Rotations and the associated momentum signals. They highlight how the RRG-based observations translate into actionable insights about direction, strength, and potential support levels, while acknowledging that these are early indicators that require ongoing monitoring and validation as the weekly process unfolds.
Sector Profiles: Observations at the Start of 2025
To provide a more granular view of the initial dynamics, each sector’s behavior is described with attention to the interplay between price action and relative strength signals as interpreted through the RRG lens. The following subsections summarize the qualitative impressions that informed the initial ranking and the allocation decision, while remaining open to revision as data accumulate.
Consumer Discretionary (XLY)
Consumer Discretionary is showing resilience after a notable upward move. The price action suggests a breakout that has introduced a fresh dynamic, with the price lingering above key levels and the potential for further upside. The important area around 210 is highlighted as a potential support zone in the event of a retracement, underscoring a structural support cushion that could help cushion declines if volatility rises. Relative strength readings confirm continued robust momentum, reinforcing the view that this sector could continue to lead in an environment of gradually improving consumer demand and discretionary spend.
The sector’s positioning within the RRG framework indicates favorable rotation characteristics. The combination of price strength and a resilient relative performance profile suggests that, for the near term, XLY could maintain leadership signals within the broader rotation pattern. The implications for the portfolio are consistent with the top-five framework: if XLY maintains its strong posture in the composite ranking, it will contribute positively to the overall performance of the 20% allocation.
Communication Services (XLC)
Communication Services is navigating a transition as it tests a breakout-turned-support dynamic. The prior resistance line has, in early 2025, shifted from a barrier to a support anchor. This change in the technical landscape often precedes a renewed push higher if momentum supports continuation. The relative strength trajectory has shown signs of breakout from a constrained trading range, with subsequent movement indicating renewed leadership potential.
From a portfolio-perspective, XLC’s movement is important for the top-five ranking. A positive trajectory in both price and relative strength enhances its case for inclusion among the five sectors with allocation. If the sector continues to demonstrate strength, it not only supports the RRG-based narrative but also helps the overall diversification of sector exposures within the portfolio.
Financials (XLF)
Financials exhibit a classic pattern of rising highs and rising lows, illustrating an ongoing uptrend in price action. This classic bullish pattern is complemented by relative strength behavior that is testing the upper boundary of a previously defined trading range. This test acts as a potential support level, suggesting that the sector could maintain its strength as long as this boundary holds. The combination of price action and relative strength implies continued leadership within the rotation framework.
From the standpoint of the ranking methodology, XLF’s continued strength supports its candidacy for inclusion in the top five. If the sector sustains its elevated relative performance and price action remains constructive, XLF could contribute meaningfully to a diversified, 20% allocation strategy.
Technology (XLK)
Technology faces a wall of resistance around the 240 area, which has been a persistent feature in the price chart. Despite this overhead resistance, there has not been a pronounced or sustained price drop compared with other sectors, and relative strength remains within the boundaries of its trading range. This suggests a consolidation environment rather than a decisive trend reversal. The ongoing absence of a sharp decline in price, coupled with an orderly relative strength pattern, implies that XLK could resolve the resistance in due course, with the potential to rejoin leadership channels if rotation supports a breakout.
In the context of the top-five selection, XLK’s status depends on whether the consolidation yields renewed strength or whether a regressive shift occurs. The sector remains in the mix as a potential contributor to the portfolio if its signal quality improves, but it may require additional confirmation through the composite metric and weekly updates.
Industrials (XLI)
Industrials is actively testing a rising support line in price action. If the support holds, the price structure remains constructive, underscoring a positive near-term outlook for the sector. The relative strength narrative provides clarity on why Industrials is ranked as the fifth sector in the current framework. A small double top formation has completed, signaling some potential relative weakness ahead, but this observation warrants confirmation through subsequent data points. The sector’s status as a top-five candidate in Version 1 appears contingent on how these signals evolve in the next few weeks and how the composite ranking system weighs the balance between price momentum and rotation strength.
Practical Implementation: Risks, Monitoring, and Next Steps
While the Version 1 framework is designed to be transparent and repeatable, it inherently carries the risks and uncertainties that come with any early-stage quantitative approach built on a visualization tool. The following considerations are central to prudent implementation:
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Data quality and consistency: The integrity of weekly and daily RRG data inputs is foundational. Any discrepancies or delays in data can affect the composite score, the sector ranking, and the resulting portfolio allocations.
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Parameter sensitivity: The method’s outcomes may be sensitive to the exact way signals are combined into a single metric. As Version 1 matures, sensitivity analyses will be valuable to understand how small changes in weighting or aggregation influence rankings and allocation decisions.
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Regime shifts: Market environments change, and rotational dynamics may behave differently in bull markets, bear markets, or sideways trading ranges. The framework must be resilient to regime shifts, with ongoing evaluation of whether the ranking criteria remain informative under different conditions.
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Forward disclosure and product considerations: The plan to disclose Version 1 outcomes weekly is a step toward openness. The decision to withhold certain technical details initially is a deliberate choice to prevent premature productization while preserving the ability to discuss results and learnings. As Version 1 evolves, a balance between disclosure and practical deployment can be revisited.
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Risk management: Fixed 20% allocations to five sectors create a straightforward portfolio, but it does not address sector-specific risk exposures or correlations. Readers should consider combining this framework with additional risk controls, such as volatility targeting, drawdown limits, or diversification adjustments, to ensure robustness across market environments.
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Iterative development: The Version 1 framework is explicitly described as a starting point. The goal is to use weekly results, feedback, and new data to refine the rules, improve signal fidelity, and enhance the interpretability of the rankings. Readers should anticipate evolutions in the methodology as the project progresses.
Next Steps in Version 1
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Refine the composite metric by testing alternative aggregation schemes (e.g., rank-based versus magnitude-based combinations) to determine which approach offers the most robust alignment with realized sector performance.
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Expand the reporting to include performance attribution data, such as sector contributions to overall portfolio return, drawdown dynamics, and exposure to risk factors.
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Introduce diagnostic visuals that illustrate the relationship between the composite metric and actual market outcomes, enabling readers to gauge the strength and persistence of signals.
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Establish a schedule for mid-cycle reviews to discuss potential methodological adjustments, confirm the validity of observed patterns, and plan incremental improvements.
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Explore scenario analyses that illustrate how the top-five ranking responds to simulated rotations or hypothetical market conditions, further validating the framework’s resilience.
Conclusion
The year 2025 marks a purposeful transition from a purely visual interpretation of Relative Rotation Graphs toward a disciplined, rules-based approach that integrates weekly and daily RRG data into a coherent, objective ranking system for the 11 SPDR sector ETFs. The central idea is to identify the top five sectors through a composite metric and to allocate 20% to each, creating a simple, transparent portfolio framework that can be tracked and tested over time. While RRGs have long served as a powerful tool for visualizing rotations and momentum, this initiative seeks to demonstrate how those insights can be distilled into a reproducible process that practitioners can scrutinize, critique, and improve.
The initial observations across Consumer Discretionary, Communication Services, Financials, Technology, and Industrials show a mix of strength, resistance, and rotation patterns characteristic of early-stage testing. Each sector’s narrative supports the broader objective: to evaluate rotation dynamics, identify leadership, and translate those signals into a structured allocation approach that can be refined with experience and data. The weekly publication cadence will enable ongoing evaluation of how well the composite metric captures the evolving market environment, offering a platform for feedback and iterative improvements.
In summary, the Version 1 program aims to deliver a transparent, testable, and scalable framework that respects the strengths of Relative Rotation Graphs while providing a practical mechanism for sector selection and portfolio construction. The process invites readers to engage with the methodology, monitor outcomes, and contribute to the collective understanding of how RRG-derived signals can inform disciplined, data-driven investment decisions. As the year unfolds, the project will continue to refine its rules, expand its data-driven insights, and evolve toward a more robust and actionable investment product.