Despite a pullback in stocks last week, short- and long-term momentum are still not signaling a reversal in trend. Additionally, energy and metals are starting to point to a positive trend which may add strength to a new reflation trend.
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.