Weekly Commentary: July 05, 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. That call comes from 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, combined with a positive yield curve reading of +0.31 (long-term rates above short-term rates). Together the rules read this as neither early recovery nor late-cycle stress, just ongoing growth.
Two sectors cleared the Buy threshold of 65 this week. Technology (XLK) topped the composite at 85.8, pulled up by a perfect cycle fit score of 100, strong relative strength (rs 77.7, with a 3-month return of +20.06%), and solid seasonality. Industrials (XLI) came next at 66.3, leaning more on seasonality (81.5) than on cycle fit (50.0). Everything else registered as Hold. No sector triggered an Avoid signal this week, since none fell to the 40 or below threshold, though Utilities (XLU) and Energy (XLE) sat near the bottom at 48.8 and 48.9.
Things worth noticing
Communications (XLC) is a useful example of how a composite can mask internal disagreement. It scored a perfect cycle fit of 100 and high seasonality (80.9), yet its relative strength is very weak at 13.8, with a 3-month return of -15.18%. Since relative strength carries the largest single weight at 40%, that price weakness dragged the composite down to a Hold despite two strong inputs. Its seasonality also carries a thin-sample flag, meaning the seasonal average rests on relatively few historical observations and deserves extra skepticism.
Technology is the opposite case: cycle fit, seasonality, and relative strength all point the same direction, which is why it sits so far above the pack. It is also worth noting the broad seasonality readings, most sectors score in the 70s and 80s, so seasonality is not doing much to separate names this week. The relative strength column is where the real spread lives, ranging from +20.06% for XLK down to -23.06% for XLE over three months.
Methodology reminder
The composite is a weighted sum: Seasonality 30%, Cycle Fit 30%, and Relative Strength 40%. In the backtest, lookahead bias is controlled using FRED ALFRED data vintages, meaning each historical date only sees macro data as it was actually reported then. The backtest figure (Strategy +247.30% vs SPY +626.21% since May 2011, net of 10 bps trading cost) is a property of this specific rule set, not a forecast, and here the strategy did not beat SPY over that window.