overview
The Strategy
Momentum rotation is built on a well-documented phenomenon in financial markets: assets that have recently outperformed tend to continue outperforming over the next 1–12 months. This effect has been observed across equities, commodities, currencies, and fixed income for decades.
Rather than picking individual stocks, the strategy identifies which market sector has the strongest trend and holds it via its ETF directly (or as direct crypto for BTC and ETH). No individual stock selection — just sector ETFs and direct crypto assets.
The result is a concentrated portfolio of 1–2 positions, rebalanced weekly (Balanced) or monthly (Growth), that systematically rotates toward market strength.
The strategy has been backtested over 19 years (2006–2025), delivering 47.72% CAGR (Balanced) vs SPY's 10.80% over the same period.
universe
Universe Classification
The investable universe spans 19 sectors: 17 sector and commodity ETFs plus direct BTC and ETH. A proprietary trend confirmation filter ensures we only allocate to sectors in genuine uptrends — not just any market with recent price movement.
US Equities (11)
Commodities & Crypto (8)
The universe is refreshed monthly. Stocks that have been acquired, delisted, suspended, or lost liquidity are automatically replaced with active alternatives. You can explore each sector's full constituent list on the Rankings page.
selection
Selection Process
Rank all 19 sectors by momentum
On each rebalance the system calculates price momentum for all 19 sectors (17 ETFs + BTC + ETH) — 16 weeks for Balanced mode, 26 weeks for Growth mode. A multi-factor trend confirmation filter then screens for sectors in genuine uptrends only. These are sorted highest to lowest — the leaderboard you see in the Rankings tab.
Select the top 1–2 sectors
The top-ranked sector(s) with positive momentum become the active investment sectors. If no sectors pass the trend confirmation filter, the strategy holds cash instead of forcing a trade.
Allocate to ETF or direct crypto
Each winning sector is held via its ETF directly (e.g. XLK for Technology, GLD for Gold). Crypto sectors (BTC, ETH) are held as direct assets — not futures or proxies.
Allocate based on your conviction level
Balanced mode (Pro): the top 2 qualifying sectors each receive 50% of capital — diversified across two strong trends. Growth mode (Premium): 100% of capital goes to the single strongest qualifying sector. Same system, maximum concentration. Higher return potential in exchange for higher volatility.
Rebalance on schedule
Balanced mode rebalances weekly (every 7 days) — catching trend changes quickly makes sense when splitting capital across two positions. Growth mode rebalances monthly (every 30 days) — the longer 26-week lookback only confirms persistent trends, so picks change less often and monthly cadence fits naturally. At rebalance, the full process repeats: re-rank, re-select, update holdings.
cadence
Rebalancing Timeline
Rebalance frequency depends on your mode. Balanced mode rebalances every 7 days (weekly). Growth mode rebalances every 30 days (monthly). The countdown to the next rebalance is displayed on the Live Picks and Performance pages.
The cadence difference reflects each mode's logic. Balanced mode splits capital across two sectors and rebalances weekly — switching one of two positions is low-cost and keeps the portfolio current. Growth mode commits 100% to a single sector and uses a 26-week lookback that only confirms persistent, high-conviction trends. Those trends don't flip week to week, so monthly rebalancing is sufficient and avoids unnecessary turnover.
On rebalance day: re-rank all sectors, select new winners, sell outgoing positions, buy incoming picks, and adjust sizing to the new weights. The process typically takes 15–30 minutes to execute through a standard brokerage.
performance
Backtested Results
Sectors tracked
19
17 ETFs + BTC + ETH
Momentum lookback
16–26 weeks
Balanced: 16w · Growth: 26w
Rebalance frequency
Weekly / Monthly
Balanced: 7d · Growth: 30d
Typical positions
1–2
Top 1–2 sectors, equal weight
Position sizing
50/50 · 100%
Balanced: equal-weight · Growth: full conviction
19-year CAGR
47–61%
Balanced: 47.72% · Growth: 61.34% vs SPY 10.80%
Sharpe ratio
1.06–1.16
Balanced: 1.163 · Growth: 1.065
Max drawdown
-46–76%
Balanced: -46.4% · Growth: -75.9%
start
Getting Started
Check the Live Picks page for current picks and their target weights.Live Picks
Review the Rankings page to understand which sectors are leading and why.Rankings
Check the Performance page to see momentum metrics and the next rebalance date.Performance
Execute trades through your own brokerage on or near the rebalance date.
Repeat on schedule. The system does the analysis — your job is disciplined execution.
— The founder
Dylan Ryan
Australia
Quantitative trader and software developer. Built Momentum Capital to systematise the ETF + crypto rotation strategy I run in my own account.