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Market Extra: One of 2018’s most successful stock plays may be about to turn

For U.S. stock-market investors, one strategy in particular has worked in 2018: the same thing that has been working.

Momentum investing, or the idea that stocks that have recently risen will continue their trend over the medium term, has been one of the strongest bets for months. However, the outperformance has been so great that momentum could be at risk of turning sharply lower.

Since the start of 2017, according to S&P Dow Jones Indices, the S&P 500 Momentum index has outperformed the S&P 500 SPX, -0.49% by 15% on a total-return basis. This is “a figure that has rarely been exceeded historically and, when it has been exceeded, has tended to predict a subsequent period of weakness for the strategy,” S&P Dow Jones Indices wrote in a report.

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