Quick Finance Tip – Momentum Time Series Anomaly

​Momentum anomalies relate to short-term share price patterns. Stock prices will be inflated or depressed for those companies releasing good or bad information, aka the “overreaction anomaly”. If investors can trade based on momentum and earn abnormal profits, it contradicts the weak form of efficient markets as it may represent a pattern in prices that can be exploited; however, researchers have argued that stocks with some degree of momentum is a product of prices adjusting to shocks in growth rates.