A rule-based ETF rotation with a cash cushion and hedges, using SPY trend and RSI/momentum signals to tilt between tech/growth, broad-market, and defensive/bond ETFs, with a narrow 3% rebalancing corridor.

Think of it as a dynamic mix of cash and ETFs chosen by a long list of simple rules. The system watches several signals: Is the overall market up (SPY today vs 200 days ago)? Is tech/momentum strong or weak (RSI and price momentum for QQQ, XLK, SPYG)? Should we hedge (short ETFs like PSQ or inverse funds) or shift into bonds (IEF, SHY, TLT, BSV)? If conditions favor risk, it tilts toward growth/tech ETFs; if conditions look risky, it tilts toward hedges or bonds. Weights are kept within a narrow band (3%), and rebalancing happens only when signals push weights out of that band. The reference point is SPY; many conditions compare other assets to SPY’s trend or relative strength to decide what to hold. The result is a rule-based “rotation” that aims to capture upside when markets are healthy while dampening losses with hedges during pullbacks.

This ETF-rotation strategy outperforms SPY on risk-adjusted return: Sharpe ~1.38 vs 1.30, annualized return ~29% vs ~22%, and drawdowns ~15.6% vs ~18.8%, helped by a cash cushion and selective hedging.