The S&P 500 is trading near an all-time high and the Nasdaq recently touched the highest level in 14 years. Stocks in all sectors are breaking out to new highs as the five-year-old bull market rages on. There is no surprise the ETFs that attempt to track momentum are outperforming.
Using a strategy that compares the performance of stock to the overall market and its sector tends to produce a basket of stocks that have been leading the market higher. As someone once said, “new highs beget new highs,” or buy high and sell higher. This strategy tends to do well when the bulls rule the overall market.
Investors looking to catch the later years of this bull market could consider riding the momentum trade. PowerShares has a number of index-focused ETFs that use momentum strategies; a few interesting options are listed below.
When considering them, investors should be aware of a momentum ETF-specific risk: eventually markets will suffer a pullback greater than 5 percent and the momentum stocks could be ...
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