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Is there any merit to the momentum theories?

The momentum theory has many fans for its useful and relatively simple nature. The momentum theory basically states that markets which are moving either up or down for some period of time cannot suddenly reverse their course.

Utilizing these strategies means jumping on a freight train, riding it for a short period of time, and jumping off before it stops and reverses direction.

It is hard to argue with the this one, but it may be hard to find momentum strong enough for an investor’s taste in certain market environments, which might mean spending too much time on the sidelines, and due to the frequent active trading involved, the investor will incur fees and be susceptible to emotions and media hype.

What is Volume?
What is Market Psychology?

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