Sector Rotation
The strategy or observed phenomenon of capital flowing between different equity sectors — typically the 11 S&P GICS sectors — based on where the economy sits in the business cycle.
Sector rotation describes how equity capital cycles between industry groups as macroeconomic conditions change. In an early cycle expansion, cyclical sectors like Consumer Discretionary, Industrials, and Financials tend to lead. In a mid cycle, Technology and Communication Services often outperform. In a late cycle, Energy, Materials, and Health Care take the lead. In a recession, defensive sectors — Utilities, Consumer Staples, and Health Care — tend to hold up best.
Practitioners track sector rotation using relative-strength calculations against the S&P 500, momentum ranking of sector ETFs (typically the State Street Select SPDR series XLY, XLK, XLF, XLE, XLI, XLB, XLU, XLP, XLV, XLC, XLRE), and volume-based indicators like the Money Flow Index. A rotating market — one where leadership passes between sectors — is often healthier than a market where a single sector dominates all gains.
BullrunData computes sector rotation live on each request. /api/v1/sectors/rotation returns S&P sectors ranked by momentum with defensive-versus-cyclical classification. /api/v1/sectors/flows adds accumulation and distribution signals for detecting where capital is flowing.