Weekly Commentary: July 03, 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, driven by industrial production (INDPRO) running at +1.7% year over year, which sits inside the 0.0% to 4.0% band the rule set treats as steady expansion. The yield curve reading of +0.31 (the spread between longer and shorter maturity Treasury yields) reinforced that classification. In plain terms, the macro inputs described an economy that is growing but not overheating or contracting.
Two sectors cleared the Buy threshold of 65 this week. Technology (XLK) topped the composite at 85.8, and it scored highly across all three components: strong seasonality (82.5), a maximum cycle fit of 100.0, and the highest relative strength in the group (77.7, with three month relative performance of +20.06%). Industrials (XLI) came in second at 66.3, leaning on strong seasonality (81.5) and solid relative strength (67.0) rather than cycle fit, which was middling at 50.0.
No sector fell to the Avoid threshold of 40 or below. The bottom of the table was occupied by Utilities (48.8) and Energy (48.9), both weighed down by weak relative strength and, in Energy's case, a three month relative return of -23.06%.
Things worth noticing
Communications (XLC) is an interesting case of internal disagreement. It carried a perfect cycle fit of 100.0 and decent seasonality (80.9), yet its relative strength score was just 13.8 with a three month relative return of -15.18%. Because relative strength carries the largest single weight at 40%, that price weakness pulled the composite down to a Hold. Note also that its seasonality is flagged "thin sample," meaning fewer historical observations support that figure, so it deserves extra caution.
Real Estate (XLRE) posted the highest seasonality reading in the table (89.8) but only reached a Hold, again because relative strength (52.9) and cycle fit (50.0) offset it. This illustrates how one strong component does not guarantee a Buy under this weighting.
Finally, the backtest is worth reading honestly: since May 2011, net of 10 bps trading cost, the strategy returned +247.30% versus SPY at +626.21%. The rule set did not beat a simple SPY hold over that window.
Methodology reminder
The composite is a weighted sum of seasonality (30%), cycle fit (30%), and relative strength (40%). Lookahead bias in the backtest is controlled using FRED ALFRED point in time vintages, so the historical test only sees data that was actually available on each date. The backtest figures are a property of this specific rule set and are not a forecast of future results.