JUL · ISSUE 27 · July 3, 2026
CONCEPTWhat momentum is (and its hidden face)
The force that makes what rises keep rising. And that, once it fades, gives it all back just as fast.
THE IDEA
trend
a self-feeding force
THE RULE
×2
amplifies both directions
THE RISK
the turn
fast, and for everyone at once
THE SIMPLE RULE
×2
= momentum multiplies the move, up and down
Momentum is the tendency of a price to keep moving in the direction it's already going. When something rises, it draws more buyers, and that buying pushes it higher. The loop works just as well downward: that's why the falls at the end tend to be so fast.
THE RULE
TO GET IT×2
×2
same force, two directions
That's why a hot stock can rise twice as fast as the market, and fall twice as fast when the story changes.
Momentum doesn't invent the move: it doubles it. It multiplies the rise when everyone piles in and the fall when everyone piles out.
- MARKET
- — The whole set of stocks, used as an average benchmark.
- STORY
- — The narrative the market tells to justify a price.
KEY IDEA
SIMPLE RULEThe trend is your friend, until it isn't
“The trend is your friend, until the end. And the end comes when there's no one left to buy.”
The oldest saying in markets sums up momentum: following the trend works, except right at the turn, when the most people are in.
- TURN
- — A trend changing direction, from up to down or the other way.
- TREND FOLLOWING
- — Buying what rises, betting it keeps rising.
WHAT IT LOOKS LIKE
SCHEMATICThe typical shape of a momentum move
Momentum takes the stairs up and the elevator down. What took months to build unwinds in weeks.
A hypothetical curve to illustrate the concept, not a real price. Notice how it accelerates at the end and turns faster than it rose.
- MOVING AVERAGE
- — The average price of recent sessions, used to see the underlying trend.
- PEAK
- — The highest point, where euphoria is greatest and so is the risk.
IMPLICATIONS
THREE KEYSThree things momentum teaches
RISING DRAWS BUYING
A rising price makes headlines, and headlines draw more buyers. That inflow pushes the price higher still. That's how a trend feeds itself.
THE RISK HIDES AT THE PEAK
The more something has risen, the more people are in and the fewer are left to buy. The moment that feels safest is usually the riskiest.
THE TURN IS FAST
When the trend runs out, everyone wants out through the same door at once. That's why the fall tends to be much faster than the rise.
Understanding momentum helps you not confuse a healthy trend with a euphoria about to turn.
- HEADLINE
- — The news that sums up a move and draws public attention.
- EXIT
- — The moment many sell at once, accelerating the fall.
THE PHASES
EXAMPLEThe four phases of a momentum move
The comfortable part to watch (acceleration) is long. The uncomfortable one (the turn) is short but decides the outcome.
A conceptual split, not a portfolio. It helps you place where in the trend you're looking.
- START
- — The early phase of a trend, when few have spotted it.
- EUPHORIA
- — The extreme optimism that tends to coincide with the price top.
TO SEE IT
5 FACTOR ETFsFive ETFs that illustrate the concept
| MTUM | - | → - | Pure momentum. It buys what rises most, so it amplifies the trend and the turn alike. |
| SPMO | - | → - | Another momentum version. Useful to see the factor with a different recipe. |
| QUAL | - | → - | Quality. Profitable, stable firms tend to hold up better when momentum turns. |
| USMV | - | → - | Low volatility. Moves less in both directions, the counterweight to momentum. |
| VLUE | - | → - | Value. Firms cheap versus their profit, another style that tends to rotate with momentum. |
Not recommendations and no day prices. They're examples of how stocks get grouped by their behavior.
- FACTOR
- — A shared trait (momentum, value, quality) that groups stocks together.
- VOLATILITY
- — How much a price swings. High means big moves in a short time.
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- MOMENTUM
- — The tendency of a price to keep moving in the same direction.
- FACTOR
- — A shared trait by which stocks are grouped and compared.