A tactical strategy that rides strong stock trends, rotates into winning sectors and bonds, and moves toward cash and a volatility hedge when the market looks unusually overheated.

This strategy first asks: “Is the stock market running too hot?” It uses RSI, a speedometer of recent price gains. If SPY or QQQ look extremely overheated, it shifts part of the portfolio into VIXY (which tends to rise when fear jumps) and BIL (short-term Treasury bills/cash-like parking). Otherwise, it follows trend: own SPY when the broad market is healthy, rotate into strong sectors like tech, financials, energy, or utilities, and sometimes hold long-term Treasury bonds (TLT). In weaker markets, it leans defensive with cash, consumer staples, and gold.

A tactical trend-following strategy that outperformed SPY in out-of-sample testing: 19.04% vs 16.43%, Sharpe 1.24, Calmar 1.56, max drawdown 12.24% vs 18.76%. Rotates into winners, hedges overheating markets, and preserves capital.