Sector Rotator: One Leveraged Sector ETF with UVXY Hedge

Plain English: Each day it scans the 11 big US stock sectors via ETFs (e.g., XLK=technology, XLE=energy, XLF=financials). If any sector looks overheated—using a 10‑day “heat gauge” (RSI) above 80—it moves to UVXY, a fund that often jumps when markets suddenly drop. If a sector looks washed‑out (RSI below 30), it bets on a short‑term rebound in that sector using either the regular ETF or a leveraged version (and sometimes SVXY, which benefits when fear fades). Otherwise it buys the sector that led over the past month and, within that sector, chooses the fund showing the stronger longer‑term trend. It holds one ETF at a time and rechecks daily. Leveraged and volatility funds are very risky and meant for short‑term use.

A daily, one‑ETF sector rotator: buys the month’s strongest sector in normal times, buys sharp dips when a sector is washed out, and flips into a volatility hedge (UVXY) when sectors look overheated. Uses leveraged funds; highly tactical and risky.

Out-of-sample edge: ~95% annualized return, Sharpe ~1.44, Calmar ~3.28, alpha ~0.70%, beta ~0.75 vs S&P. A tactical sector-rotation with volatility hedges aims for higher upside and diversification than the S&P, with controlled risk.

Composite Momentum Score (CMS) framework. It evaluates sectors based on multi-horizon momentum signals (short-, medium-, and long-term returns) and ranks them according to updated research. The sectors are ordered explicitly as: XLC, XLY, XLK, XLU, XLI, XLP, XLV, XLB, XLRE, XLE. If any sector becomes overbought (RSI > 80), exposure shifts defensively into UVXY. If a sector is oversold (RSI < 30), the model tilts into leveraged or inverse ETFs to capture mean-reversion opportunities. Otherwise, the rotation logic selects the top-ranked sector(s) by CMS, maintaining diversification but hedging downside risk through volatility products.