Inside Markets — Momentum Factor Unwind

The momentum factor unwinds for a fourth time this calendar year with a seasonal preference to own YTD laggards likely in play. Except for the DeepSeek-induced unwind from January, the other two episodes traced out clearly defined reversals from oversold levels. The last two occurrences also lacked a fundamental driver, which seems to be the case again. While past episodes have offered opportunities to add long exposure, prolonged weakness could threaten key technical support near 6640. Next Wednesday’s NVDA report is the near-term catalyst for the momentum factor and broader market, but a sustained close below ~6640 would be a reason to dial back exposure in our view.