Note: In an effort to use and talk about more sector products, we are expressing our models with Vanguard sector funds this month.
ELEV8 Model Input Scores: June 2026
The table below shows the ELEV8 model’s scores for June. The Technology sector remains entrenched leadership. The AI trade has been a massive tailwind to earnings as the latest reporting season revealed a number of long-term strategic partnerships between leading LLM platforms like OpenAI, Anthropic and Gemini, and the networking, hardware and infrastructure companies that will build out their data, power and networking infrastructure. AI momentum and FOMO buying has created a very narrow leadership profile for global equities at the stock and sector level as AI enthusiasm is attracting sustained inflows.
Key: Pattern = L/T (1yr+) Price Pattern of the Sector ETF, Mean Rating = simple average of 1-6 ratings (buy/sell) of all stocks within the sector, WTD Mean Rating = Cap Weighted Sector Constituent rating, OB = Overbought, OS = Oversold, N=Neutral
Model Input Commentary
The equity uptrend is the key macro driver at present. Commodities prices have been in consolidation since April. Consumer sectors have been pressured by high interest rates. Those same high interest rates have kept investors out of legacy low vol. exposures like Utilities and Staples. The biggest anomaly comes from the sector and industry relative trends. The AI trade is turning market discounting into a binary question. The biggest delineation on performance is whether the market views a stock as within the AI halo or without. For example, the Communication services sector has fallen out of favor largely because META appears to be bucketing as an AI lower even as Alphabet corp. is being embraced as a winner. With geopolitics still a big macro swing factor, June will be about whether Crude prices continue to retreat from Q1 highs or whether investors will move off their AI enthusiasm over concern for inflation and energy supply constraints.
ELEV8 Sector Rotation Model Portfolio: June Positioning vs. Benchmark Simulated S&P 500 (data as of 5/29/2026)
Previous Positioning as of last Rebalance: April 28, 2026
Elev8 rotated to overweight Tech and industrial exposure in May along with overweight positions in Energy and Materials sectors.
Performance vs. S&P 500 (VOO), May 2026
Elev8 regained its footing in May. Out Technology OW helped us dig out of April’s tough result. Our largest OW in the Technology sector buoyed performance as the sector outperformed the S&P 500 by +988bps. The move to be out of the Consumer sectors was a mixed bag. Discretionary lagged but was the second-best performing sector vs. the S&P 500 in May (-184bps) while Staples was a laggard (-633bps). Based on sector performance, the allocation to the Energy sector was misstep. Crude prices remained firm, but Energy stocks continued to retraced Q1 gains (-967bps vs. S&P 500). Materials sector (-425bps vs. SP50) and Industrial sectors (-415bps vs. S&P 500) were better, but it was an anomalous month where only 1 sector (Technology) outperformed the S&P 500.
Conclusion
Since equities bottomed at the end of March, the AI trade has led global equities higher. We are seeing huge earnings beats, renewed momentum, FOMO buying and clear concentration of capital into the AI complex. Taking the other side of the trade here without a negative catalyst is akin to jumping in front of a speeding train. We do think there are two main risks to the bull. The first is concentration risk and the second is inflation risk. We remain long the AI trade, but we think at this juncture, hedging for inflation and higher rates is the choice over hedging for lower rates and recession risk.
