ByteTrend

Trend following enhances returns and controls risk. Also known as the momentum factor, it is one of a handful of factors in investing with a proven ability to generate alpha. This month, @ByteTree has relaunched ByteTrend (bytetrend.io/) to help investors analyse, understand, and capitalise on the momentum effect. The chart shows the returns from buying winners (blue) vs buying losers (red). The momentum effect has generated a 16x return over the past thirty years.

The bytetrend.io platform offers an MCP that allows you to interrogate 20 years of trend data on 4,000 stocks, plus ETFs, commodities, and crypto. This allows you to plug it into an LLM of your choice, and interrogate the data with natural language. Given the incredible moves today (Nasdaq $QQQ most notably), I asked it to investigate similar episodes from the past and share the strongest conclusions. What history says: These days are rare and come in clusters. There have been 50 days of -4% or worse since 2005, about 1 in 110 sessions, and 34 of them fell in 2008, 2020 and 2022. After any -4% day, another followed within a month 64% of the time; on an ordinary day that chance is 10%. There’s no reliable bounce. The next day was up 29 times out of 50, with a median of +0.3%, much like a normal day (55% up). On the first -4% day of a selloff, the next day was up only 5 times in 11. The headline 12-month return is flattered by 2008 and 2020. Across all 50 days the median 12-month return is +33.5%, against +19.4% for all days. Drops that started within 10% of the high, as today’s did, give +20.8%. That’s an ordinary year, not a buy-the-crash payoff. Only two near-high drops failed. Of 14 with a full year of data, 12 were higher a year later. The exceptions were 4 January 2008 (−36%) and 3 February 2022 (−14%), both the start of bear markets. In 2022 Weekly Local was already 3 going in. Weekly Local separated the good cases from the bad. On all 9 days the Nasdaq fell 4% with Weekly Local at 5 the day before, it was higher 12 months later (median +44%). Those 9 days make up six separate episodes, so it’s a small sample. The low usually wasn’t in yet: four of the six episodes closed lower within three months, by up to 16% (October 2018) and 18% (February 2020). In the recoveries Weekly Local bottomed at 2. In 2022 it fell to 1, and in 2008 to 0. What’s new this time is weaker leadership against the world. In all nine of those cases Weekly CAPR was also 5. Today it’s 3, and the Nasdaq’s CAPR is 5.4% below its 3 June peak, two days before the June drop. No -4% day in the dataset has had Weekly Local 5 with Weekly CAPR at 3 or less. The nearest cases are Brexit day 2016 (+36% a year later), February 2022 (−14%) and April 2025 (+31%). High beta works both ways. After 48 of 49 -4% days, the Nasdaq beat MSCI World over the next 12 months; the exception was February 2022. On an ordinary day that happens 84% of the time. Breadth was already soft. Across the 4,093 ByteTrend stocks, the share of Weekly Local 5s yesterday was 27.5%. That’s in the bottom fifth of readings since 2010, where the median is 39%. Before the harmless shocks of 2016 and February 2018 it was 41–44%. Today’s level is closer to August 2011, February 2022 and April 2025, which had mixed outcomes. Hedges have worked less well since 2021. On these days $GLD (SPDR Gold Shares) rose half the time overall but only 3 times in 12 since 2021, and it fell 3.7% on 5 June. $TLT (iShares 20+ Year Treasury Bond) rose 71% of the time overall and half the time since 2021. $XLP (Consumer Staples Select Sector SPDR) rose 6 times in 45, and bitcoin 10 times in 30. @ByteTree @AtlasPulse @WinderKit

Two cloud software stocks went from bottom to top in our rankings. $SNOW and $DDOG both had ByteTrend’s lowest relative trend (CAPR) score, 0 out of 5, in May. Both now hold the top score of 5. $DDOG made the leap in a single day, on 7 May.

How long does a top trend score usually last? $TRV (Travelers) has held a top ByteTrend relative trend (CAPR) score, 5 out of 5, for 17 straight weeks. Its longest since 2018: 31 weeks. Only six of its runs at 5 since 2018 have passed 13 weeks.

Daily trends are recovering. Weekly trends haven’t budged. Just 8.8% of 4,093 ByteTrend stocks hold a top weekly relative trend (CAPR) score of 5/5, and 33% sit at 0: nearly four 0s per 5. The daily share of 5s has almost doubled since 9 Oct, to 17%. The chart shows relative trend scores of 5 in green (alpha generators) and scores of 0 in red (underperformers).

Canada’s Big Five banks are trending as one. All five score 4 or 5 out of 5 on ByteTrend’s relative trend (CAPR) score, and all five sit at 5 on the daily score. $TD and $BNS just hit fresh 30-week relative highs (Leading Trend).

The bigger the stock, the stronger its trend score. Of 70 Western stocks worth over $200 bn, 21% hold ByteTrend’s top relative trend score (5 out of 5) and 10% the weakest score (0). Under $2 bn: 4% and 43%. $PLTR, $CRWD and $PM are among the giants at 5.

Industrial gas giants: short-term bounce, long-term slump. On ByteTrend’s daily relative trend (CAPR) score, $LIN and Air Liquide are 4 out of 5 and $APD 5. Weekly scores: 0, 0 and 1. Linde’s weekly score has sat at 0 or 1 since July.

LVMH has been stuck since March. LVMH’s $MC.PA ByteTrend relative trend (CAPR) score, which measures it against world stocks, has been 0 out of 5 every trading day since 13 March: 7.5 months. Hermès $RMS.PA and Christian Dior $CDI.PA also sit on 0 today.

Caterpillar has slipped to a fresh 30-week relative low. $CAT’s ByteTrend relative trend (CAPR) score was 5 out of 5 all year until late July. Now it’s 2, and a Weakening Trend (making relative lows with a score above 0). Only 6 of the 300 largest Western stocks are at such lows.

Yesterday's Trend Headlines ServiceNow slumps and BlackRock climbs in ByteTrend’s trend scores. $NOW (ServiceNow): relative trend (CAPR) score down from 3 to 1 out of 5 after a 30% weekly fall. $BLK (BlackRock): up from 3 to 5, a fresh 30-week relative high (Leading Trend). National Grid $NGG: up from 0 to 3, the biggest gain among the top 300 Western stocks. AB InBev $BUD: down from 2 to 0. Gold: down from 3 to 2, a 30-week relative low. The share of stocks on a daily score of 5 jumped from 14% to 17%.

New relative highs today Healthcare dominates the leaderboard, with: $LLY, $ABBV, $TMO, $AMGN, $GILD. Chinese banks also there, despite property/crash narrative.

Estee Lauder $EL

Healthcare is quietly claiming fresh relative highs. Just 4 of the 300 largest Western stocks hit a 30-week high vs the world index. Two are Thermo Fisher $TMO and Amgen $AMGN, both on top daily ByteTrend scores (5/5). $TMO’s weekly trend score was 0 out of 5 in July, now it's back a 3 and making new relative highs.

Big oil leads the West’s largest stocks on trend. Of the largest Western stocks, energy has the top average weekly ByteTrend relative trend (CAPR) score: 3.4/5. Utilities are weakest with 1.0. Using daily data (30d and 200d MAs), 18 of 25 energy names, incl. $XOM and $SHEL, score 5. Crude Oil Weekly ByteTrend chart:

Microsoft’s trend has gone from bottom to near the top, but it's right on the edge... $MSFT, which reported results this week, has a relative trend (CAPR) score of 4 out of 5 weekly and 5 daily, per ByteTrend. It sat at 0 from late January to late July.

Canada’s life insurers are quietly holding the top spot. Great-West Lifeco $GWO has held a top ByteTrend relative trend (CAPR) score of 5 out of 5 every day since 13 April, about 28 weeks. And Manulife ($MFC) has held its 5 since 5 June, 21 weeks running. But the trend really began in January 2024...