Concept

Price momentum

The tendency of a price's recent trend to keep going, usually measured by its returns over the past several months. Positive momentum means it has been rising faster than its peers; negative momentum, falling faster.

Why we track it

Sector Compass ranks sectors by momentum: the average of each one's 1, 3 and 6 month returns. It describes where money has been going, not where it will go next.

Asset allocationHow a portfolio is split among kinds of investments, such as stocks, bonds and cash.
BacktestingTesting an investing rule on historical data to see how it would have performed before putting money behind it.
Basis pointOne hundredth of a percentage point (0.01%), often written bp.
Bear marketA fall of roughly 20% or more from a recent peak, usually over several months.
Bull marketA long stretch of rising prices across a market, often dated from a 20% rise off a low.
Business cycle stagesThe economy’s long rise and fall: years of growth, a slowdown, sometimes a recession, then recovery.

Why we track it

Related terms