Near-term momentum in the major European markets shifted negative on weaker earnings, mostly resulting from a stronger Euro which some may see as a competitive weakness. Meanwhile, emerging markets and energy continue to strengthen in the near term with energy signaling a possible rebound.
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.