sector-rotation

name	sector-rotation
description	Use this skill when the user asks about sector rotation, which sectors are leading or lagging, sector relative strength, where we are in the economic cycle, or which sector to overweight. Also use when ranking sectors or analyzing a specific sector's context.
license	MIT
metadata	{"author":"quantagent","version":"1.0"}
allowed-tools	detect_sector_rotation, get_sector_performance_ranked, compute_sector_relative_strength, get_industry_performance

Sector Rotation Analysis

Overview

Sector leadership rotates ahead of the economic cycle. Reading the rotation tells you (a) the market's macro expectation and (b) where new longs have a tailwind. Use detect_sector_rotation for the pattern, get_sector_performance_ranked for the raw ranking, and compute_sector_relative_strength for benchmark-relative trends.

Methodology

• Relative strength (RS), not absolute return, is the unit of analysis: RS = sector return / SPY return over the window. RS > 1 is leadership.
• RS momentum (change in RS over half the lookback) separates improving sectors (accumulate early) from merely extended leaders.
• Risk-on vs risk-off: average RS momentum of cyclical sectors (Tech, Discretionary, Financials, Industrials, Materials, Communication, Energy, Real Estate) minus defensive sectors (Staples, Utilities, Healthcare). Positive spread = risk-on rotation.

Cycle Phase Mapping

Leadership groups map to economic cycle phases:

Phase	Typical leaders
early-recovery	Financials, Consumer Discretionary, Real Estate, Industrials
mid-expansion	Technology, Communication Services, Industrials
late-cycle	Energy, Materials, Consumer Staples, Healthcare
recession	Utilities, Consumer Staples, Healthcare

Treat the phase estimate as context, not a forecast — rotation can be noise over short windows. Confirm with at least a 1-month and a 3-month view before calling a phase change.

How to Report

1. Lead with the rotation signal (risk-on/risk-off/neutral) and cycle phase.
2. Name leading, improving, and deteriorating sectors — improving sectors are usually the actionable list.
3. For a specific sector question, give its RS ratio, rank, trend, and top industries (get_industry_performance; warn that industry drill-down is slow on first use).
4. Cross-check with the market regime: sector longs in a bear regime need smaller size regardless of relative strength.