Our Observations: Nearly every asset class is close to 0 in near-term returns, indicating that the market continues to be in a state of confusion. A strong push in emerging markets helped reverse the course of near-term momentum. When combined with strong long-term momentum, emerging markets appear to maintain their position as leaders among stocks.
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.