Momentum Trade Sinks as Bernstein Warns on Record Valuations
- Strategy of riding stock trends gets hit by Treasury selloff
- Bernstein recommends neutral exposure to momentum positions
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One of the most crowded trades of this stock bull market is falling out of favor as bond volatility breaks out.
The momentum strategy -- which buys the past year’s winners and dumps the losers -- dropped 2% at the New York open after suffering its worst day in three months on Monday, a Dow Jones index shows. Investor darlings from Tesla Inc. to Cathie Wood’s ARK Innovation ETF dropped around 10% in early Tuesday trading.