| 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
- Lead with the rotation signal (risk-on/risk-off/neutral) and cycle phase.
- Name leading, improving, and deteriorating sectors — improving sectors
are usually the actionable list.
- 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).
- Cross-check with the market regime: sector longs in a bear regime need
smaller size regardless of relative strength.
