Momentum Review: Sectors & Industries (May 2025 Edition)

Dear readers,

Welcome back to My Weekly Stock, where in-depth market analysis meets proven momentum-based trading strategies. My mission? To help you win in the markets with unbiased, data-driven insights you can act on.

This mid-week update is all about my momentum review. In this post series, I analyze a different curated list of ETFs or stock tickers covering either key market segments, sectors, or individual stocks. I focus on understanding where we are in the cycle with a mid-to-long-term perspective. My momentum model combines 3 elements: performance, trend, and key levels. This structured approach helps identify strengths, weaknesses, and emerging opportunities across various market segments.

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SUMMARY

The past month delivered impressive price action for growth and cyclical sectors, with the bounce from April’s lows showing strong follow-through and powerful gains, which is exactly what bulls were hoping for after the spring sell-off.

This rally pushed most sectors back above their 30-week EMA—my favorite long-term trend line, keeping the V-shaped recovery scenario well in play. The next big hurdle is reclaiming their previous all-time highs, which may take time, especially as we remain vulnerable to negative trade headlines that could spark renewed selling pressure.

That said, many of the growth and cyclical sectors are flashing—or are very close to flashing—a buy signal based on my weekly chart algorithm. I’m personally deploying cash in my long-term accounts in a disciplined, staggered manner.

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My Analytical Approach

My momentum framework is divided into three parts: performance, trends, and key levels.

I like to see securities trading within 5% of their 1-year high, which indicates strong momentum and minimal overhead resistance. Additionally, I look for signs of accelerating gains in recent periods.

I assess the strength of a ETF’s weekly chart using a trend rating system on a scale of 1 to 5. A score of 3 or above indicates a strong trend worth holding. A score of 2 or below signals weakening momentum and suggests preparing an exit plan.

My trend rating is based on five criteria centered around the 9- and 30-week exponential moving averages (EMAs):

1. The 9-week EMA is above the 30-week EMA (most important).

2. Price is trading above the 9-week EMA.

3. Price is trading above the 30-week EMA.

4. The 9-week EMA trend line is rising.

5. The 30-week EMA trend line is rising.

In the core of an uptrend, the 9-week EMA often acts as support, while a confirmed loss of the 30-week EMA with no reaction typically suggests a trend change on the horizon.

I complement my analysis by looking at key levels. Support and resistance levels are critical technical analysis components, serving as indicators for potential trend reversals or continuations. My preferred method is to look for previous highs and lows, any levels where the trend has historically changed, and price gaps.

Why This Framework?

I developed this framework to ride uptrends confidently and to filter out noise from the price action. Breakouts can be messy—ranging markets, failed breakouts, and sharp reversals are all challenges we face as investors. Even the best uptrend on paper can be challenging to trade in real life.

My analysis approach helps me manage my positions effectively. Even if you don’t own any tickers below, you can adapt parts of this framework to navigate the market more confidently.

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Coverage

In this post, I will cover 16 ETFs, each tracking different sectors or industry, including:

(1) Growth:

• $FDN (First Trust Dow Jones Internet Index Fund) – Internet/digital economy

• $IGV (iShares Expanded Tech-Software Sector ETF) – Software

• $SMH (VanEck Semiconductor ETF) – Semiconductors

• $HACK (Prime Cyber Security ETF) – Cybersecurity

(2) Defensive:

• $VDC (Vanguard Consumer Staples ETF) – Consumer staples

• $VHT (Vanguard Health Care ETF) – Healthcare

• $VPU (Vanguard Utilities ETF) – Utilities

(3) Cyclical:

• $XLE (Energy Select Sector SPDR Fund) – Energy

• $XME (SPDR S&P Metals & Mining ETF) – Metals & Mining

• $PAVE (Global X U.S. Infrastructure Development ETF) – Infrastructure

• $XHB (SPDR S&P Homebuilders ETF) – Homebuilders

• $VIS (Vanguard Industrials ETF) - Industrials

• $IYT (iShares U.S. Transportation ETF) - Transportation

• $KBE (SPDR S&P Bank ETF) - Banks

• $XRT (SPDR Retail ETF) - Retail

• $VNQ (Vanguard Real Estate ETF) – Real estate

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Momentum Analysis

Growth & Defensive

In all the charts below, the 9-week EMA is in BLUE, while the 30-week EMA is in YELLOW.

My Rating: “WATCH” means interesting set-up in formation but too early to invest

$FDN – Internet/digital economy ⭐️⭐️⭐️⭐️

The multi-week rally from April’s low took us back above the 30-week EMA, cutting through resistance along the way. This kind of setup suggests more upside ahead. Still, a breakout above the previous all-time high would undoubtedly solidify the bull case.

$IGV - Software ⭐️⭐️⭐️

Similar setup.

$SMH - Semiconductors ⭐️⭐️

Mainly in a similar situation, although we have more overhead resistance to deal with before re-challenging the previous all-time highs.

$HACK – Cybersecurity⭐️⭐️⭐️⭐️

Emerging as a leading sector in 2025. It reclaimed the 30-week EMA over a month ago and is now just a few inches from its previous high.

$VDC – Consumer staples ⭐️⭐️⭐️⭐️

Ranging since September, it might suffer in the coming months if risk-on sentiment comes back in full swing and Treasury yields remain stubbornly high. Yet, it is still holding above key long-term trend lines so far.

$VHT – Healthcare

Stuck in a negative downtrend for months despite a (failed) breakout attempt earlier this year. I’d be cautious when picking stocks in the sector at the moment.

$VPU - Utilities ⭐️⭐️⭐️

Held steady during the Q1 turmoil and already saw a strong bounce since the beginning of April, taking us back to all-time highs. Prime for a first breakout attempt.

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Cyclicals