An aggressive market-timing strategy that avoids an overheated stock market by moving to Treasurys and UVXY, otherwise making 2x bullish or bearish bets on the two most volatile sectors.

This strategy first checks whether the overall U.S. stock market (SPY, a stand-in for the S&P 500) looks overheated using RSI, a speedometer of recent price gains. If the market looks too hot, it shifts into defense: a mix of the strongest Treasury-bond funds and UVXY, a fund that tends to jump when market fear spikes. If the market is not overheated, it looks across 8 sectors such as technology, energy, healthcare, real estate, and financials. For each sector, it uses a well-known company as a “sector clue” (like AAPL for tech or XOM for energy). If that clue stock is not too overheated, it buys a 2x bullish sector fund; if it is overheated, it buys a 2x bearish fund that profits if that sector falls. It then narrows all of those choices down to the 2 sectors with the biggest recent price swings and invests there equally. In short: avoid a very hot market, otherwise make aggressive bets—up or down—on the most volatile sectors.

Out-of-sample: 26.8% annualized return vs 19.7% S&P. Defensive Treasuries/UVXY when overheated; otherwise aggressive 2x sector bets. Higher upside with regime switching, but larger drawdowns.