Our monthly active house research models enter October with a clear focus on Technology, Health Care and Energy. Elev8 expresses that view through eight sector allocations, while Top3 concentrates on the three highest-ranked sectors. Both seek to outperform the Vanguard S&P 500 ETF (VOO) over a full business cycle, adapting monthly as market leadership evolves.
October positions
Technology, Health Care and Energy share October’s highest model score of 5. Technology remains a leader even with a negative RatesUP input: stock-level and sector evidence outweigh that headwind. The models can retain growth exposure when the broader macro signals are less supportive.
| Sector ETF | Elev8 September |
Elev8 October |
Top3 September |
Top3 October |
| Technology (VGT) | 40.23% | 42.62% | 50.16% | 54.95% |
| Health Care (VHT) | 10.18% | 12.86% | 0.00% | 25.59% |
| Financials (VFH) | 15.69% | 12.74% | 28.21% | 0.00% |
| Communication Services (VOX) | 0.00% | 9.24% | 0.00% | 0.00% |
| Industrials (VIS) | 10.68% | 7.86% | 0.00% | 0.00% |
| Energy (VDE) | 8.59% | 6.99% | 21.63% | 19.47% |
| Consumer Discretionary (VCR) | 9.34% | 5.91% | 0.00% | 0.00% |
| Materials (VAW) | 3.76% | 1.78% | 0.00% | 0.00% |
Dashboard allocations, ordered by Elev8 October weight (raw scores below). Both models hold zero Real Estate, Staples and Utilities in October. Elev8 held 1.53% Real Estate in September. Rounding may affect totals.
Top3 replaces Financials with Health Care, allocating 54.95% to VGT, 25.59% to VHT and 19.47% to VDE. Health Care adds a different earnings exposure alongside AI and commodity sensitivity. Financials’ weaker price pattern and sector readings reduce its ranking despite a supportive rates input, illustrating why higher yields alone are insufficient to secure a position.
Elev8 keeps eight sectors, adds Communication Services at 9.24% and exits Real Estate. Health Care rises to 12.86%, while Financials, Industrials, Discretionary and Materials receive smaller weights than in September. Its largest active overweights are Technology, Energy and Health Care, at approximately 3.77, 3.54 and 3.24 percentage points above the dashboard reference portfolio.
October’s opportunity is to participate in durable earnings leadership while retaining exposure to other return drivers. AI demand can sustain Technology, Health Care can broaden participation, and Energy remains relevant to inflation and geopolitical risk. A steadier leadership trend would give monthly signals more time to work. The discipline is to keep testing those relationships as the cycle evolves, with full-cycle outperformance remaining the objective.
October indicator grids
Both models use the same October sector scores. Elev8 spreads exposure across eight sectors, while Top3 concentrates in the three leaders. The final column shows how each model expresses those signals.
Elev8
| Sector ETF | Price pattern |
Mean | Wtd. | OB/OS | Sector | Ind. | Equity UP |
Rates UP |
Total | October weight |
| TECH VGT | 1 | 1 | 1 | 0 | 2 | 0 | 1 | -1 | 5 | 42.62% |
| HLTH VHT | 1 | 1 | 1 | 0 | 2 | 1 | -1 | 0 | 5 | 12.86% |
| ENE VDE | 1 | 1 | 1 | 1 | 0 | 0 | 0 | 1 | 5 | 6.99% |
| FIN VFH | 0 | 1 | 1 | 1 | -1 | -1 | 1 | 1 | 3 | 12.74% |
| COMM VOX | 0 | -1 | 1 | 0 | 1 | 0 | 0 | -1 | 0 | 9.24% |
| IND VIS | -1 | 1 | -1 | 1 | -1 | -1 | 1 | 1 | 0 | 7.86% |
| MAT VAW | 0 | 1 | -1 | 1 | -1 | -1 | 0 | 1 | 0 | 1.78% |
| COND VCR | -1 | -1 | 1 | 1 | -1 | -1 | 1 | -1 | -2 | 5.91% |
| RE VNQ | -1 | -1 | -1 | 1 | -1 | -1 | 1 | 0 | -3 | 0.00% |
| CONS VDC | 0 | -1 | -1 | 0 | -1 | -1 | -1 | -1 | -6 | 0.00% |
| UTIL VPU | -1 | -1 | -1 | 1 | -1 | -1 | -1 | -1 | -6 | 0.00% |
Sorted by total score, then October allocation.
Top3
| Sector ETF | Price pattern |
Mean | Wtd. | OB/OS | Sector | Ind. | Equity UP |
Rates UP |
Total | October weight |
| TECH VGT | 1 | 1 | 1 | 0 | 2 | 0 | 1 | -1 | 5 | 54.95% |
| HLTH VHT | 1 | 1 | 1 | 0 | 2 | 1 | -1 | 0 | 5 | 25.59% |
| ENE VDE | 1 | 1 | 1 | 1 | 0 | 0 | 0 | 1 | 5 | 19.47% |
| FIN VFH | 0 | 1 | 1 | 1 | -1 | -1 | 1 | 1 | 3 | 0.00% |
| MAT VAW | 0 | 1 | -1 | 1 | -1 | -1 | 0 | 1 | 0 | 0.00% |
| IND VIS | -1 | 1 | -1 | 1 | -1 | -1 | 1 | 1 | 0 | 0.00% |
| COMM VOX | 0 | -1 | 1 | 0 | 1 | 0 | 0 | -1 | 0 | 0.00% |
| COND VCR | -1 | -1 | 1 | 1 | -1 | -1 | 1 | -1 | -2 | 0.00% |
| RE VNQ | -1 | -1 | -1 | 1 | -1 | -1 | 1 | 0 | -3 | 0.00% |
| CONS VDC | 0 | -1 | -1 | 0 | -1 | -1 | -1 | -1 | -6 | 0.00% |
| UTIL VPU | -1 | -1 | -1 | 1 | -1 | -1 | -1 | -1 | -6 | 0.00% |
Sorted by total score, then October allocation.
Source: October2026 tabs in the Elev8 and THRE sector model dashboards. Component scores and allocations reproduced directly; weights may not sum to 100% after rounding.
September performance recap
| Return through September 29 | Elev8 | Top3 | VOO |
| Trailing 1 month | -1.19% | -1.00% | -0.42% |
| Trailing 3 months | +1.89% | +0.99% | +3.42% |
| Trailing 6 months | +13.42% | +5.84% | +21.16% |
| 2026 year to date | +8.48% | +15.32% | +12.99% |
Performance vs. the Vanguard S&P 500 ETF (VOO). (Returns are through September 29)
Performance vs. the Vanguard S&P 500 ETF (VOO) was -77 basis points for Elev8 and -58 basis points for Top3 over the latest month. Year to date, Top3 remains ahead of VOO by 233 bps, while Elev8 trails by 451 bps. Both models gained over the past six months but captured less of VOO’s advance. Top3’s stronger early-year gains have preserved its year-to-date lead.
Geopolitical shocks, inflation concerns and AI enthusiasm have repeatedly changed sector leadership faster than a monthly allocation can adapt. September’s starting portfolios paired Technology with meaningful Financials and Energy exposure. That combination reflects the difficulty of positioning for inflation while also capturing an unusually concentrated growth cycle.
Growth’s resilience alongside rising rates is particularly instructive. The Fed raised its policy range to 3.75–4.00% on September 16, yet NVIDIA’s August results showed 106% year-over-year revenue growth. Our interpretation is that exceptional AI earnings growth can outweigh the valuation pressure from higher discount rates. A conventional cycle framework can therefore recognize the inflation risk correctly and still underestimate Technology’s relative strength. [1–2]
Sources and performance notes
ETF Action / FactSet model tearsheets, internally titled ETF Sector – Elev8 and T3SectorLong, September 29, 2026. October and September tabs in the Elev8 and THRE sector dashboards. July house reports provide historical context. Performance uses the tearsheets’ Model – Net rows. [1] Federal Reserve FOMC statement, September 16, 2026. [2] NVIDIA Q2 FY2027 results, August 26, 2026.
Federal Reserve statement NVIDIA earnings release
Model results are hypothetical and use ETF Action and FactSet methodologies. These house research models are not investable funds. Past performance does not predict future results, and the full-cycle objective is not a guarantee. For informational purposes only.
