Sector Rs Leader Follower
In plain terms
Stocks in sectors with the strongest relative strength versus the S&P 500 tend to outperform those in the weakest sectors over the next 1-3 months.
How it works
Sector relative strength against SPY predicts individual stock momentum within the sector. Leaders (top 2 sectors by 13-week RS) carry their constituents upward; laggards drag theirs down. The leader-follower dynamic persists for 4-12 weeks.
Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Sector ETF prices
A data feed this strategy reads, refreshed on its normal schedule.
Expected edge
- Reported return
- ~1-3% per month in top sector decile
- Tested over
- 1963-1995 (Moskowitz-Grinblatt)
Industry momentum explains ~50% of individual stock momentum; sector RS signal earns 1-3% per month in top decile.
Related families
Whether the market overall is trending up or down conditions how strongly sector leadership translates into individual stock performance.
Stocks with disproportionately high ETF ownership experience predictable price dislocations when ETFs rebalance, creating short-term mean-reversion opportunities.
Explore Sector Rs Leader Follower on alphactor.ai
See which tickers this family is currently firing on, with live signals and rankings.