The big market news over the summer was the unwind of the momentum trade. The Goldman Sachs High Beta Momo Index suffered a 42% drawdown, and the dead bodies in hedge fund world have slowly been rising to the surface.
While everyone knows that memory stocks in particular got smashed, the above MoMo index is made up momentum longs AND momentum shorts. Momentum shorts generally work. That is falling stocks have a habit of keep falling. But was has been most interesting is the momentum short index has had its biggest rally since 2021. I can tell you from experience, you want to be short when this peaks, and cover at lows. As of today, we are really closer to a high than a low.
A good time to short is also when the KDP High Yield index is rising. And it has been rising this year.
