Here’s the thing about 2026’s stock market: it’s basically playing favorites, and momentum investors are absolutely crushing it.
If you’ve been paying attention, you’ve probably noticed that the market isn’t rising evenly. Some stocks are on fire while others are getting absolutely torched. That’s not a bug—it’s a feature, and it’s creating a goldmine for a specific type of investor.
Momentum investing sounds fancy, but it’s actually pretty straightforward: buy the winners, sell the losers. Rinse, repeat, profit. And this year? It’s working like a charm. The iShares MSCI USA Momentum Factor ETF (ticker: MTUM) is up over 20% year-to-date, while the S&P 500 is sitting at a measly 8%. That’s not just beating the market—that’s lapping it.
According to Société Générale’s research team, this isn’t random luck. There’s an “unusual divergence” happening between market winners and losers that’s basically printing money for momentum traders. Think of it like the market decided to split into two teams: the cool kids and everyone else. And the gap between them is getting wider by the day.
The numbers tell the story. Energy stocks are up nearly 28% this year, while healthcare is down 7.6%. That’s a 35-percentage-point spread. For context, that kind of disparity is rare—we’re talking pandemic-level weirdness. The difference between long and short momentum portfolios has been widening since October, and it shows no signs of stopping.
Why is this happening? A few things are colliding at once. First, there’s the AI boom, which has created a clear divide between tech winners and everyone else. Then you’ve got the Iran war throwing oil prices into the stratosphere, which is making energy stocks look like the smartest investment since sliced bread. Meanwhile, sectors like healthcare and financials are getting left in the dust.
The kicker? Société Générale’s Andrew Lapthorne says this kind of market behavior is “extremely rare” and has only been sustained during periods like the Covid pandemic. We’re in uncharted territory here, folks.
What does this mean for regular investors? Well, if you’re betting on the market as a whole, you’re missing out. But if you’re smart about picking winners—or using funds that do it for you—you’re potentially looking at serious outperformance. The momentum strategy is working because the market is genuinely split between thriving sectors and struggling ones.
Of course, nothing lasts forever. Fears about AI disruption, inflation, and geopolitical conflict are all playing a role in this divergence, and eventually, the market will probably normalize. But right now, in May 2026, momentum is king. The winners keep winning, the losers keep losing, and investors who understand that dynamic are laughing all the way to the bank.
