Is SPMO Momentum Dead or Coiling for a Snap-Back?

Momentum is functioning here less as a stock-selection skill and more as a delayed macro bet on capital allocation persistence. The hidden second-order effect is that a semiannual rebalance lets the ETF mechanically extend exposure to the same crowded leadership set even after marginal breadth deteriorates, so the factor can remain profitable right until it becomes the cleanest expression of the next de-risking event. That makes the product useful in sustained liquidity-driven tapes, but fragile when leadership narrows and correlation inside growth rises.

The current setup implies elevated index-to-index dispersion rather than a simple equity beta trade. If AI capex expectations stay intact, the strategy likely keeps compounding because the ETF is effectively monetizing reflexive flows into the same large-cap winners that already dominate passive ownership. But if those flows pause, the ETF becomes a forced holder of yesterday's leaders while faster-moving capital rotates out; that lag is where the drawdown accelerates, because momentum portfolios tend to lose on both price and timing at once.

Consensus is probably underestimating how much of this trade is already crowded through multiple wrappers: passive index funds, AI-themed baskets, and derivative overlays all concentrate the same names. That means a single semis air pocket can hit not just the underlying sector but the whole momentum complex as de-grossing spreads across portfolios. The move is not overdone if earnings revisions keep confirming the theme; it is underdone only if investors are still treating it like a generic equity tilt rather than a leveraged expression of sentiment persistence with a built-in calendar lag.