Weekly Commentary: May 31, 2026
⚠️ Not financial advice. This is auto-generated each week by Anthropic's Claude (an AI model). Brian Beals is not a registered investment advisor, and Anthropic's Claude is not licensed to provide personalized financial advice. The screener is a research and methodology demo, not a recommendation system. Past performance does not predict future results. Do your own research before making any investment decisions.
By Brian Beals. Methodology and code: github.com/brianbeals/sector-rotation-screener. Commentary generated by Anthropic's Claude (claude-opus-4-8).
What the screen said this week
The screen classified the current environment as mid-cycle, based on industrial production (INDPRO) growing 1.4% year over year, which falls inside the 0.0% to 4.0% band the rule set treats as steady expansion. The yield curve reading of +0.46 (a positive spread between longer and shorter rates) supported that same read. In short, the macro inputs pointed to ongoing, moderate growth rather than an early rebound or a late-cycle slowdown.
Technology (XLK) topped the composite at 93.8 and was the only sector carrying a Buy signal this week, where Buy is defined as a composite of 65 or higher. Its score reflected strength across all three inputs: high seasonality (82.0), a maximum cycle-fit score (100.0), and the strongest relative strength in the group (98.0, with three-month relative strength of +27.26%). Relative strength here measures how a sector has performed against the broad market. Everything else landed in Hold territory, with Communications (XLC) a distant second at 59.3.
Four sectors carried Avoid signals, defined as a composite of 40 or lower: Financials (XLF), Healthcare (XLV), Consumer Staples (XLP), and Utilities (XLU). In each case weak relative strength was the main drag, with three-month figures ranging from roughly -10% to -18%.
Things worth noticing
There is a sharp gap between the top sector and the rest. XLK's relative strength of 98.0 stands far above the next nearest sector, while most others cluster in the teens to low 40s. That concentration meant the composite separated cleanly even though seasonality scores were broadly similar across the field.
XLC is worth a closer look. Its cycle-fit and seasonality scores were both high (100.0 and 80.9), but its relative strength was only 12.6 with three-month relative strength of -12.26%. The seasonality figure also carried a "thin sample" flag, meaning fewer historical observations sit behind that number, so it deserves more caution than a fully populated reading. The result is a sector where the macro and calendar inputs disagreed sharply with recent price action.
Also notable: the backtest shows the strategy returned +257.75% versus SPY's +639.48% since May 2011, net of 10 bps trading cost. The rule set did not beat a simple SPY hold over that window.
Methodology reminder
The composite is the weighted sum named above: seasonality 30%, cycle fit 30%, and relative strength 40%. Lookahead bias in the backtest is controlled using FRED ALFRED data vintages, so each historical decision uses only the macro data that was actually available at the time. The backtest result is a property of this specific rule set over this specific window, not a forecast of what any sector or the strategy will do next.