Momentum Stocks Face Potential Violent July Unwind
Momentum trades historically struggle in July, and one strategist warns this year could be especially brutal for trend-chasers.
If you've been riding the momentum wave this year, pay attention — July has a nasty habit of punishing that trade, and 2025 could hit harder than most. One strategist is waving a red flag, and the early tremors are already showing up in the market.
Momentum strategies essentially pile into whatever's been working — high-flying stocks that keep grinding higher. The problem? When the reversal comes, it doesn't tap you on the shoulder. It body-slams you. July historically marks a seasonal weak spot for these trades, and crowded positions make the potential unwind even uglier.
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This year carries extra risk because the momentum trade has been red-hot heading into summer. The more extended the run-up, the more violent the snapback tends to be when sentiment shifts or a catalyst forces de-risking. Think forced selling, margin calls, and a race for the exit all at once.
The strategist flagged that the rumblings have already started — meaning this isn't a hypothetical warning, it's a live situation worth monitoring right now. If you're long momentum names, that's your cue to check position sizes, tighten stops, or at minimum know exactly where your exit is before the crowd figures it out.
Don't wait for confirmation to act. By the time a momentum unwind is obvious, the damage is already done. Continue reading at MarketWatch.com
