Momentum

Category: Quant Insight

Short- and long-term momentum are looking good for stocks, specifically emerging markets. We believe the energy commodities continue to look postitive while agricultural commodities are slipping into a full bear market. We think the most notable move has been in EM sovereign debt which has had a reversal of fortune. However, this is on the heels of a strong several months and may just be a pullback from overbought conditions.

Momentum measures the rate of acceleration, either positive or negative, in a security’s price and may indicate which markets are positioned for gains or losses. Investing based on momentum entails establishing long positions in securities with positive recent returns and short positions in those with negative recent returns. Momentum in asset classes may illustrate the development of trends in the market.

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