27.01.25 - Big unwinding of momentum strategies

Amid today’s market turmoil, momentum strategists appear to be unwinding their positions which triggers a substantial reversal in performance trends. Recent laggards (like Nestlé) are emerging as today’s winners, while former high-flyers like Nvidia and similar stocks are now among the biggest losers.

Momentum investing is a strategy of buying stocks or other securities that have had high returns over the past days and weeks, and selling those that have had poor returns over the same period.

Markets: Tech sector with semiconductors heavily down as well as the utilities sector. Cryptos tried to rebound without success yet.

My View: So far it is not a market correction as there is no broad sell-off. The focus remains on the unwinding of momentum trades, and it will be interesting to see how long this trend persists.
This unexpected sharp correction on the tech side plays into my cards. I have taken advantage of the significant drop by closing my short positions in Constellation Energy, Vistra, Nvidia and half of my semiconductor short position (ETF).
While I am not personally invested in cryptocurrencies, I closely monitor their movements as a gauge for overall market sentiment.

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