Exits & Practical Use — 28-Year Sector Rotation Guide
28-year back-test report — summary · 26 August 2026
Sector Orb answers when to step in. Exit timing is a separate craft — one this tool leaves in your hands. Here is how to use it, and how to handle the exit yourself.
What the signals tell you
- BUY / green distribution — a sector that has been sold down: money flow ≤ 40, relative strength negative, close below the lower band. Historically, price 20 days later is higher 62.7% of the time (n=2,403) — the strongest signal on this site.
- CONTINUATION — a sector in momentum: money flow ≥ 60, relative strength positive, close above the upper band. Price is higher 20 days later 60.1% of the time (n=3,501). It is a strength flag — momentum is welcome to run.
- Risk direction — the RISK-ON / MIXED / RISK-OFF switch is a breadth indicator (how many cyclical vs defensive sectors are in accumulation). it qualifies every entry signal with market context.
Caveat: both signals track the market's own drift. Measured vs the S&P 500, their excess win rate is ≈49% — the timing value is real but modest, and "beats the market" is a claim we leave to others.
Exits — two standard rules
- Trailing stop at 2× ATR(10) — average true range over the last 10 sessions. Each sector's band width is already computed daily; scale the stop to the sector's own volatility instead of a fixed percentage.
- Fixed 20-day horizon — by day 20 the move has run its historical course on average. Check the chart range (30D/60D/90D/150D/250D) to confirm.
Either rule is standard for technical rotation tools and keeps decisions mechanical.
Which indicators actually drove the wins
The current configuration wasn't guesswork — every design choice below was re-run across the 28-year window (full sweep horizons 5–60 days). What moved the needle:
| Design choice tested | Effect | Verdict |
|---|---|---|
| Bollinger band width — daily 1σ (current) | widening to 2σ cuts CONTINUATION to 57.7% | keep 1σ |
| Weekly confirmation layer | damages BUY (62.6% → 56%), sample thins to n=511 | dropped |
| Typical price (H+L+C)/3 input | CONTINUATION 60.1% → 61.1%, but BUY falls to 60.0% | trade-off kept minimal |
| Volume pressure as a signal leg | the sharpest gauge of attention among the three ingredients | kept at low weight (20%) |
| Relative strength & money flow | the two reliable ingredients across all runs | core legs |
Where the tool draws the line
- Not dollar capital flows — the MFI name is a historical convention; it is a price-volume oscillator (typical price × volume).
- Not investment advice — see the disclaimer.
- Built for entries. The evaluation archive documents the reasoning.
Testing continues — industry baskets, multi-timeframe confirmations, entry refinements. Beta Test News subscribers see each result first and help us test before features ship.