TOP3 Model Input Scores: May 2026
The table below shows theTOP3 model’s scores for May. April’s big developments revolved around a sharp rotation back into AI infrastructure exposures with a heavy concentration of Technology Sector buying. The S&P 500 pivoted sharply from corrective price action to a bullish reversal that took the index to fresh all-time highs. The pivot triggered a short-covering signal for the portfolio during the month where the model covered its underweight positions in the Technology, Discretionary, Financials sectors. With April’s developments the macro picture has changed. Equities have re-established an uptrend while commodities, interest rates and USD spent the month in consolidation.
Key: Pattern = L/T (1yr+) Price Pattern of the Sector ETF, Mean Rating = simple average of 1-6 ratings (buyàsell) of all stocks within the sector, WTD Mean Rating = Cap Weighted Sector Constituent rating, OB = Overbought, OS = Oversold, N=Neutral
Model Input Commentary
The Top3 Model went into April positioned for continued defensive rotation. Timing was an issue as ceasefire news broke two days after we locked in our monthly allocations. The nature of the reversal caught us by surprise as Energy sector stocks retraced YTD gains sharply. Given the steepness of the decline, we were expecting a more drawn-out corrective process, but AI strength and investor risk appetite combined to take equities into a V-shaped recovery forcing us to cover.
TOP3 Sector Rotation Model Portfolio: May Positioning vs. Benchmark Simulated S&P 500 (data as of 4/28/2026)
Previous Positioning as of last monthly rebalance: March 30, 2026
The model covered its Tech Sector short on April 22. It starts May aligned with the bull trend in AI Infrastructure and positioned for more buying in Commodities related exposures.
Performance vs. S&P 500 Simulated BMK, April 2026
TOP3 was on the wrong side of the market for most of April. We had expectations that the bid for commodities exposures would remain firmer than it did, but the sharp rotation to Technology shares forced the model to cover. Overall, it’s been a volatile year in 2026 and the Top3 model has swung big with mixed results. The model lost approximately 1200bps in April and is now flat YTD with the S&P 500.
Despite a tough month of April, the TOP3 Model remains positive YTD and since inception (August 29, 2024).
Conclusion
Our trending models aren’t built for sharp month-to-month whipsaws. Geopolitics can be a tough dynamic for trend-following models to handle. For May, the model has rotated to a barbell between Technology and Commodities exposures and its avoiding low vol. and consumer focused plays.
About TOP3
We introduced the TOP3 Sector Rotation Model in May of 2024. Here’s a look under the hood at the inputs we use to score the 11 GICS Sectors and our resulting positions. The model includes up to 14 indicators that range from:
- Stock Level Technical Characteristics
- Macro-overlays:
- equity trend (S&P 500)
- interest rate trend (10yr US Treasury Yield)
- commodities trend (Bloomberg Commodities Index)
- USD trend (vs. EUR & Broad Currency Indices)
- Relative performance vs. the benchmark S&P 500
- Overbought/Oversold oscillator studies
We use the largest passive sector-based ETF by AUM ($) for each sector as our proxy for TOP3 sector positions. We select 3 out of 11 Sectors each month and have no exposure to the 8 sectors with the lowest scores in our model.
Data from Factset Research Systems Inc.
