Does buying the laggards of a leading sector group beat the market? A backtest
A backtest of buying a leading sector group's laggards at 10:00 ET: the question, the bar written first, the verdict and its limits. Coil Edge Research.
Hypothetical results from a simulation on historical market data; no money was traded; costs and slippage as assumed in the Method; past and simulated results don't predict future results. Not investment advice.
The question. When a sector group's ETF is ahead of the S&P 500 at 10:00 ET, do the group's laggards by recent return, the ones taking part in the day's move, beat the S&P 500 from 10:00 ET to the close, after costs?
The verdict. It did not pass its pre-registered bar. Buying the laggards of groups that lead the market at 10:00 ET and selling at the close lost about 8.5 bps a trade after costs and the S&P 500's return (22,492 trades over 2,246 sessions, 2016 to 2026). Before costs the average trade was flat. The test was powered, so this is a measured negative, not a null, and it held across volatility regimes, market trend and years.
Backtest (hypothetical), run in Backtrader 1.9.78.123, data to 2026-10-09
Method, in one paragraph. 10 years of 30-minute bars (2016-10 to 2026-10-09) for 14 sector and industry ETF groups and their stocks. A hypothetical buy at the 10:00 ET open on days a group led the S&P 500, sold at the close, each trade compared with the S&P 500 over the same span and with two placebos, net of assumed costs.
What this does not show.
- It tests one entry time and one holding period, plus a few variants; other screens, other holding periods and other entry times are different studies.
- The sign depends on the cost assumption: before costs the average trade is flat.
- The stocks are today's constituents applied back to 2016, which flatters every arm.
- A simulation is not a record of trades.
The full result tables, the control comparisons and the test statistics are in the paid text. A person pays from a crypto wallet (USDC on Base); an AI agent pays over x402. There is no card option for a single study.
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Does buying the laggards of a leading sector group beat the market?
Not in this backtest. Buying the day's laggards in leading groups at 10:00 ET and selling at the close was flat before costs and lost about 8.5 bps a trade after them, across volatility regimes, market trend and years.
Coil Edge Research, 2026-10-22.