Are Momentum Stocks Losing their Momentum?

AreĀ momentum stocksĀ losing their luster?

High flying momentum stocks like Tesla Motors (NasdaqGS:TSLA), Twitter (NYSE:TWTR), and GoPro (NasdaqGS:GPRO) have experienced sharp pullbacks over the past few months. Tesla and TwitterĀ have fallenĀ below their 50-day and 200-day moving average while GoPro now trades below its 50-day moving average. What’s next?

(Audio)Listen to Ron DeLegge @ The Index Investing Show

The iShares MSCI USA Momentum Factor ETF (NYSEARCA:MTUM) is one proxy for large and mid cap U.S. stocks with momentum characteristics like Tesla, Twitter, and GoPro. Despite its recentĀ pullback, MTUM is still outperforming the broader U.S. stock market. (See chart below) Over the past six months, MTUM has gained almost 10% while the Vanguard Total U.S. Stock Market ETF (NYSEARCA:VTI) is ahead by 4.92%. MTUM holds a basket of 125 stocks that are screened for momentum. Ā Top holdings include Facbook, Johnson & Johnson, and Wells Fargo.

MTUM

Momentum stocks will typically outperform when the stock market is rising and underperform when it’s falling.

A deeper and prolonged sell off in momentum stocks could be an early warning sign the broader stock market’s appetite for high beta/high risk stocks is waning. It’s also another signalĀ the psychology or sentiment of stock market participants is changing from offensive to defensive.

Follow us on Twitter @ ETFguide

Subscribe To Our Newsletter

Get updates and learn from the best

More To Explore

Social Security Income, 100% Tax Free

June 1, 2023 @ 11am EST | 8 am PDT Worry Free Retirement Plan Webinar Registration link: https://mailchi.mp/etfguide/retirement-planning-webinar-2023 Agenda: Learn proven strategies to maximize your

Tax Free RMDs from your IRA and 401k Plan

June 1, 2023 @ 11am EST | 8 am PDT Worry Free Retirement Plan Webinar Registration link: https://mailchi.mp/etfguide/retirement-planning-webinar-2023 Agenda: Learn proven strategies to maximize your

Do You Want To Boost Your Business?

drop us a line and keep in touch

5 ETFs for Dividend Investors

See how dividend investing with ETFs can improve your bottom line.

ONLY AVAILABLE AT ETFguide