Momentum is in the Air

It’s quite something to go from a “sky is falling” scenario just a little over 3 months ago (when markets hit their low points amidst the tariff headline drama) to now getting almost-regular headlines about a new all-time high (ATH) from one or more market indexes over the course of a few days. If it’s one’s first rodeo, this just might feel a little impossible to navigate with an investment portfolio in tow.

What we tend to see, though, is momentum beget further momentum. And just because the trading day ends (US market hours: 9:30am - 4pm eastern standard time), it doesn’t mean the momentum ends. The middle of July saw six consecutive positive trading days for the Nasdaq Composite Index, and you might be surprised to hear that we’ve already seen two other instances of six consecutive positive days in a row already this year (May and June). Momentum begets momentum.

Of note, the size of positive growth of the recent six-day win streak wasn’t that impressive - a mere 1.9% over those six days. But let’s be honest: if you’re an investor, that’s just being too picky. I’ll take that kind of growth over such a short term regularly. That’s how wealth is built.

But it does indicate a declining amount of participation amongst stocks in the recent growth to new ATHs amongst the market indexes. Semiconductor companies have shown the most near-term improvement (NVDA +71% since 4/7/25 low), with nearly 100% of semiconductor stocks trading above their 10-week moving average (that’s a very good near-term metric)! Software (another piece of the technology sector) is only seeing about half of its associated stocks trading above their 10-week moving average.

But back to the point: momentum is in the air.

Bias might get in the way and cause an investor to think they should wait for a pullback from ATHs to invest more cash, though data shows otherwise. Investing at market ATHs actually has slightly more favorable returns than investing at any other random time. See the graph below that I like from Ben Carlson, a respected voice in my industry:

My advice is always to get cash invested as soon as feasibly possible. Avoid trying to time the market. These concepts of thinking we can get it perfectly right are all logical fallacies… and for what? Hopefully adding an extra 1% to whatever amount of money you’re investing? There’s a good chance you can make up for that by tightening up your budget and spending habits. Formalize your process, and get your money working for you sooner rather than later.