The momentum factor describes a quantitative investing style that favors stocks that are outperforming with strong price momentum. The iShares MSCI USA Momentum Factor ETF (MTUM) offers a tradable vehicle that uses the momentum factor. It has been a source of significant underperformance over the past few trading sessions, with high-flying names undergoing significant retracements, including Palantir Technologies (PLTR) which has fallen over 25% in the past few sessions. While the momentum factor has been a source of long-term outperformance, MTUM and its largest holdings are showing vulnerability. We believe they became overextended and are poised to consolidate over the next several weeks. The ETF remains in a long-term bullish trend, but a corrective period is likely to keep hold for several weeks per intermediate-term overbought/oversold metrics like the weekly stochastic oscillator and DeMARK Indicators. MTUM is now approaching initial support from its 50-day moving average (MA), near $216, which has the potential to serve as a staging ground for a bounce. Ultimately, would we not rule out a deeper pullback to the 200-day MA, near $202, before the correction matures. One of the most widely followed momentum stocks is PLTR, and like MTUM, it has intermediate-term overbought ‘sell’ signals from the stochastic oscillator and DeMARK Indicators. Last week’s pullback resulted in an ‘outside-down’ bar, which further increases risk of a deeper pullback in the weeks ahead. Initial support is located at former resistance near $85. We are deriving secondary support from the daily cloud model (not shown), which rises into the low-$70s next week. The deterioration in our short- and intermediate-term metrics has not affected our long-term momentum gauges, which still support the broader uptrend in PLTR. Goldman Sachs (GS) is another example of a momentum stock that is retreating in response to overbought indications on its weekly chart. The downturn in the weekly stochastics is an intermediate-term setback within the context of a long-term uptrend, and it increases risk of a deeper pullback following by several more weeks of consolidation. Initial support for GS is defined by last November’s highs, and more important secondary support can be found at the 200-day MA, roughly $529. Both PLTR and GS exemplify the loss of momentum behind the momentum factor, shared by heavyweights like Walmart (WMT) and Costco Wholesale (COST). While their collective shift may be a continued drag on MTUM and other proxies, the consolidation phase has the potential to ultimately refresh their long-term uptrends. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . 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