Forward average returns after each regime, for the selected lookback (how far back the divergence is measured). Green = positive, red = negative. Bold = beats the all-days baseline (top row) over that horizon — i.e. that regime did better than usual. episodes = distinct entries into the regime (the honest sample size — the day count overstates it because overlapping forward windows are highly correlated). Regimes overlap by design (a "tech lagging" day can also be "small-caps leading"). Historical base-rate context, not a forecast.
Bars = sector return over the selected lookback (1wk = WK1, 1mo = WK4; 3mo ≈ sum of recent weekly moves). Leaders at top, laggards at bottom — the rotation story behind the index spread above.
Sector rotation trend — weekly moves, last 13 points
07-21
07-28
08-04
08-10
08-16
08-21
08-28
09-04
09-11
09-18
09-25
10-02
10-09
AIx
-1.0
-2.7
+15.6
+1.6
+5.4
-2.1
+2.6
-0.1
-1.4
+2.2
+0.9
+3.0
+0.2
Semi
+0.5
-7.8
+17.2
-2.2
+4.6
-9.0
+0.1
+1.5
+2.7
+4.4
+3.5
+6.0
-5.0
Software
-1.2
+5.2
+4.1
-0.2
+1.4
+1.7
+1.3
-1.1
-2.7
-3.5
-1.3
+0.7
+2.5
Healthcare
-0.3
+1.2
+2.4
+3.6
+0.4
+2.9
-0.7
+0.6
-4.1
-0.7
-1.1
-1.9
+0.6
Consumer
+0.1
+3.6
+0.4
-1.5
+0.7
+0.9
-1.8
-0.0
-3.5
-2.9
-0.4
-0.3
+0.9
Industrials
+0.0
+0.7
+6.8
-0.9
+1.1
-2.1
-1.2
+0.8
-2.4
-0.4
-0.5
+0.5
-1.3
Energy
+1.3
-4.0
+2.3
+1.6
+2.0
-0.0
-0.3
+0.9
-0.1
-1.1
-3.0
+1.2
+2.5
Financial
+0.1
+1.6
+1.4
-1.2
+1.5
-0.4
-0.5
+0.9
-2.1
-1.7
-1.8
-0.5
-0.3
Materials
-0.1
-2.2
+5.9
+6.3
-0.5
+3.1
-0.6
+0.6
-3.6
+0.2
-0.6
-1.2
-0.2
Each cell = that week's sector return. Green = up, red = down; deeper colour = bigger move. Read left→right to see leadership rotate between sectors over time.
How to read it
All three down together, tightly has been the strongest bullish setup — a synchronized dip tends to mean-revert (historically well above baseline over 3–6 months). A synchronized melt-up, by contrast, has led to below-baseline forward returns, with small-caps barely following.
Small-caps rallying while large-caps fall (your breadth example) has historically been bullish for the broad market over the next 3–6 months — small-cap leadership during large-cap weakness signals broadening participation.
Tech lagging the broad market (Nasdaq ≪ S&P) has preceded below-baseline forward returns across all three — a mild caution, with small-caps the weakest follow-through.
Risk-off rotation — large-caps holding while small-caps get dumped — tends to see large-caps keep doing OK but small-caps keep lagging; the bullish flip is when small-caps start to lead again.
When the three move the same direction by a similar amount, forward returns sit close to the baseline — as you expected, low divergence carries little edge.
AkshayaAI — Market Divergence Pulse. Informational & educational only; not investment advice. Forward figures are historical base rates over 2016-11-07–2026-10-09 on overlapping windows (episode counts show the independent-sample size); past performance does not guarantee future results. Russell 2000 proxied by the IWM ETF. Regenerated daily.
