Glossary term
Momentum
The tendency of a price trend to persist in its current direction; the foundation of trend-following, opposite to mean reversion.
Momentum is the tendency of a price trend to persist in its current direction, so that recent winners keep winning and recent losers keep losing over a measurable horizon, typically three to twelve months. It is the foundation of trend-following and the conceptual opposite of mean reversion.
It matters because persistence is tradable: a trend that has held for months has a measurable tendency to continue, which is why momentum is among the most documented factors in market history. The catch is that momentum reverses hardest at turning points, so a strategy that rode a trend up can give back gains quickly when the regime flips.
Closelooknet treats momentum as regime context rather than a standalone signal. The Hurst Exponent is the tool used to judge the regime: a reading above 0.5 indicates a trending regime, below 0.5 favours mean reversion. The momentum-weighted (MW) variants of the Rubin and HALO indices apply this directly, tilting weight toward constituents with stronger recent returns.
In practice, a constituent up sharply over the trailing 63 trading days receives more weight in CL-HALO-MW than a flat peer, and the Lab logs when a name's momentum regime changes. A momentum read is set against divergence, which often flags when a trend is tiring.