Momentum

Category: Quant Insight

Short-term momentum continues to increase for stocks while nearly every other asset class is flat to negative. Nearly every major market has been hitting new highs and concurrently the advance-decline lines are hitting new highs, indicating that the global stock markets are healthy and likely to continue.

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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