The Great Rotation Begins

Issue 40;

• High-volatility stocks dump; low-volatility stocks step in.
• AI shovel providers take over from AI spenders.
• The old economy fights back – strength in REITs and energy.

The World Index drops to a ByteTrend Score of 4. A major market rotation is underway, with energy and REITs starting to improve. That comes at a time when the leadership shows signs of exhaustion. It’s hard to say what the impact on the World Index will be, but change is coming.

World Index – Developed Markets – Daily

Natural Gas

The move in natural gas is notable, and it now holds a ByteTrend score of 5, while its heavier friend, crude oil, languishes with a ByteTrend score of 1. Winter heating demand is higher than expected, while storage remains light.

Yet the rotation in markets has begun. In recent weeks, GTI has highlighted the concentration in alpha, or leading CAPR trends. The beta, i.e. the state of the average stock, is reasonably healthy, so the market seems underpinned. But we can’t ignore the decrease in leading and emerging trends, and the breakout of weakening and bear trends. If that keeps going, the market will fall.

ByteTrend: Signal by Type – Local Currency

CAPR: Volatility

The rotation is clearer through volatility. Volatile speculative stocks have turned down while medium- and low-volatility stocks have improved. This is a major change in the post-April market environment.

CAPR: Global Sectors

The rotation becomes clear by sector as well. Every sector rose in terms of net strength versus weakness, while tech fell sharply. Second-tier two tech stocks are a dangerous place to be.

The regional CAPR shows strength in Japan, EM, and global midcaps. The Mag 7 have started to give back ground despite blowout earnings. Maybe valuations are just too high.

CAPR: Europe, USA, USA ex Mag 7, Emerging Markets, and Japan - Past Year

The world matrix shows improvement in financials, reversing a slowing trend over recent weeks. It also sees strength in energy, utilities, industrials, and consumer defensives. But the biggest jump comes from real estate, which has improved globally, especially in Asia. Technology slips.

Average ByteTrend Score by Region and Sector Heatmap - CAPR

Style Groups

Momentum and volatility indices are shown relative to the S&P 500 since the 2022 low. High momentum has been the winner, but it is rolling over. High vol stocks joined the party post April, and they are rolling over as well. Low vol stocks rallied last week, but negative momentum, which is mainly consumer stocks, remains weak. Low vol stocks should turn higher from here, which bodes well for ByteTree Quality.

Leading Trends with New Highs

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of 5. All charts shown are CAPR rebased to 100.

Amazon

Amazon delivered bumper results as AWS proved to be the shovel provider behind the AI boom. They are laying off 30,000 corporate staff and 15% of the HR department in a cost-saving measure. The impact of AI on white collar jobs is real.

SK Hynix

Just as AWS saw a boost from AI demand, so did Korea’s SK Hynix. This has been an extraordinary move for a company that dominates in high-bandwidth memory (HBM) for AI chips, supplying custom HBM solutions to Nvidia, Microsoft, and Broadcom. They are thought to be ahead of Micron.

Micron

Yet the market likes Micron too, and the stock advance has been of a similar magnitude. However, their ambitious megafab project in Upstate New York, aimed at boosting U.S. semiconductor production, faces a 2–3 year setback, with initial output now pushed to late 2030. This cautious expansion comes despite a sold-out 2026 HBM supply, prioritising near-term AI ramps over aggressive builds. Still, revenues have been booming.

Amphenol

APH is another shovel provider to the AI industry. They are a global leader in the design, manufacture, and marketing of high-technology interconnect, sensor, and antenna solutions. These products enable the "Electronics Revolution" by providing reliable connectivity and sensing capabilities across diverse applications, from high-speed data transmission to rugged environments.

PDD

PDD is headquartered in Dublin and has primary operations in Shanghai. The company has built a network of sourcing, logistics, and fulfilment capabilities supporting its platforms in over 80 countries. These include Pinduoduo, a leading e-commerce app in China for goods, and Temu, a global e-commerce marketplace offering fashion, electronics, home goods, and more. The company streamlines merchant manufacturing and sales internationally, competing with Shein and Amazon on affordability. PDD has its first ByteTrend score of 5 in nearly two years.

Welltower

WELL is the first REIT we have seen on the leaderboard for a while. They focus on senior housing, which is doing well as the post-war baby boomer is aged between 61 and 79. Yet the stock trades at a rich valuation compared to its history.

There are 113 additional leading trends with new highs in the GTI universe. In a list dominated by industrials, Japanese conglomerates stand out. Despite the stocks highlighted, tech is thin this week. Financials still feature with regional banks in Europe. Energy is larger, along with healthcare. Biotech looks good.

Emerging Trends

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of less than 5. They don’t have to be in an uptrend, just emerging. All charts shown are CAPR rebased to 100.

Bank of America

On November 5, Bank of America hosted its first Investor Day in over a decade, outlining a strategy for profit growth and bold targets in wealth management, where CEO Brian Moynihan sees a "huge opportunity" in the U.S. ultra-high-net-worth segment. The event emphasised potential acquisitions in payments and ecosystem expansions.

Thermo Fisher Scientific

TMO is the world's leading provider of scientific instrumentation, reagents, consumables, software, and services, enabling customers to advance healthcare, environmental protection, and scientific discovery. The board has approved a $5bn buyback, and they recently beat guidance.

Prologis

PLD, a REIT, is the world's largest owner, operator, and developer of logistics real estate, providing intelligent infrastructure that powers global commerce by connecting physical supply chains with digital ecosystems. The recent strength reflects resilience in logistics, with warehouse vacancies stabilising.

AIA Group

Hong Kong-listed AIA is an insurance company that grew sales by 25% last year, driven by robust demand in HK and China. Edmund Sze-Wing Tse retired as Group Board Chairman effective October 1, 2025. He was succeeded by Sir Mark Tucker, who also serves as HSBC Holdings Chairman, to ensure continuity in strategic growth. AIA has also extended its principal sponsorship with Tottenham Hotspur until 2032.

There are 69 additional emerging trends in the GTI universe. REITs feature in the USA and Hong Kong, as does steel. Healthcare is also strong, alongside energy. We are seeing strength in oil refining and services. The old economy fights back.

Weakening

These stocks are trading at the 30-week CAPR lows with a ByteTrend Score above 0. They are weakening trends but not yet downtrends. All charts shown are CAPR rebased to 100.

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