tech layoff sector rotation
What it checks
When 3+ tech firms announce big layoffs in two weeks, growth-tech rotates out and defensives rotate in.
Mechanism
Cross-firm clustering of large tech layoffs (>=3 distinct companies announcing >=250 cuts each within 14d) signals an industry-wide demand shock. Drives rotation OUT of growth-tech ETFs (QQQ, XLK, XLY, ARKK) INTO defensives (XLP, XLU, XLV).
Signal rule
rolling-14d distinct tech-company count of >=250 layoff events >= 3 → SHORT QQQ/XLK/XLY/ARKK + LONG XLP/XLU/XLV on T+1; hold 20/40d.
Data dependencies
daily_pricesAdjusted-close OHLCV for every US-listed ticker; primary price feed.
layoffs_fyi_eventsPublic layoffs.fyi layoff announcements with company-to-ticker resolution.
Expected edge
- Paper alpha
- 50-200 bps
- Paper window
- T+1 to T+40d
50-200 bps over 20-40d on the rotation pair.
Example tickers where this is likely to fire
Illustrative only — the signal fires based on the live data, not a fixed list.
Related families
layoff wave shortLabor / corporate eventsLarge announced layoffs proxy demand stress, margin pressure, or post-hype cost cutting. The first-pass signal shorts unusually large layoff events after a T+1 lag.
repeat layoff acceleration shortMacroA single layoff is noisy; a 2nd layoff at the same company within 180d signals the first round didn't fix demand and management is in a cost-cutting spiral. Hallock 1998 and Farber-Hallock 2009 both document the asymmetric short-side response on repeat events.
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