Momentum is structural
is the speed or velocity of price changes in a
, security, or tradable instrument.
shows the rate of change in price movement over a period of time to help investors determine the strength of a trend.
Momentum = Price today - Price n periods ago
Momentum measures the velocity of price changes as opposed to the actual price levels themselves.
Momentum is tendency of stocks to move in direction of established trend.
Momentum is universal phenomenon
Momentum on 3 6 12 month tends to last for next 3 6 12 months.
Momentum on short time frame of less than one month is mean reverting
Momentum on 10 days or less timeframe with magnitude of 205 plus is even more likely to mean revert
Momentum on longer duration of 3 years plus tends to mean revert
Momentum is usually calculated as ratio of price to MA or as ratio of 2 moving averages
Momentum can be absolute (TI65 above 1.05 or MDT above 1.18) or relative when used to rank
Momentum used as absolute momentum tells you when it started and ended
Momentum used as sort only tells you how stock is ranked relative to other stocks
Momentum is used to narrow trading universe by focusing on stocks with high or low momentum
Momentum relative to S&P is used to select stocks in many methods
Momentum typically when used on 6 month timeframe is used with one month lag as one month momentum has strong mean reverting tendency (MDT25 is example of this c25/avgc126.25)
Momentum is used to isolate Top 25 or Top 50 or Top 200 stocks and then that list is used to find anticipation or pullback setups
Momentum is the most persistent tendency of stocks across world market
Momentum on lower priced stock is of higher magnitude
Momentum on higher priced stock tends to be lower
Momentum on low liquidity stocks tend to be higher
Momentum on high liquidity stock is lower
Momentum is foundation of Top 25 method
Momentum is the structural tendency exploited in ROC TI65, MDT , DT and 3/300
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