Momentum trading "panicked sell-off" may indicate an approaching temporary bottom

This was once one of Wall Street’s hottest trades, but a series of triple negative news has caused one of the strongest pullbacks in momentum stocks in recent years. Some professional stock investors believe that this large-scale sell-off may be nearing a critical point. The momentum factor — a trading strategy that involves chasing winners and selling losers — experienced its third-largest single-day decline in nearly two years on Wednesday, dropping more than 9% from its February high. Barclays analysts noted that similar declines in the past often signaled a temporary bottom, followed by a rebound. (Bloomberg)