In our trading room the acronym of MoMo is describing “momentum” in the markets, and sometimes, the lack thereof. I wasn’t surprised to read an article on ZeroHedge that mentions this; however, was surprised to read that some money managers use the idea of “momentum trading/investing” in a cavalier way.
Bloomberg’s Dani Burger notes that with more than half of their bets on high flyers like technology and online retailers, hedge funds have near-record exposure to momentum trades, a strategy that’s up 2.6 percent in August even as the S&P 500 heads for its worst month since the election. The resiliency of the bet was on display Tuesday, when Alphabet and Amazon opened nearly 1% lower before rebounding along with Apple to deliver the S&P 500’s biggest intraday reversal in 10 months.
“It’s like these things are like gold — it’s almost like a safe haven,” said Mark Connors, the global head of risk advisory at Credit Suisse Group AG.
“This resilient price action in equities is commensurate with the constructive positioning we see across hedge fund strategies and speaks to the persistent positive sentiment in 2017.”
The much-followed FANG Stocks soared over 2.1% off the opening lows…
Almost like GOLD the guy said? When the global central bankers remove the $Trillions in liquidity support, and FANG stocks (or any stock) are suddenly in a downward MoMo move, I wonder how “golden” his investment thesis will be?