Several hedge fund strategies have momentum biases, in particular L/S Equity, and CTAs. Considering the fact that this rotation took place in a bullish environment, most hedge fund strategies ended the week in positive territory.

If past elections provide any guidance, prospects for a Trump reelection look slim. History suggests that a second term reelection almost always requires strong growth. In most past election campaigns, polls did not materially shift after October.

Momentum is a strategy which buys stocks trending higher and sells stocks on a downtrend within an index. It is systematic and has no considerations for earnings, valuation, or other fundamental metrics such as dividends.

With stock markets close to all-time highs at a time of very elevated economic uncertainty, the question arises if investors have become too confident. Today's chart from The Yale School of Management Stock Market Confidence Indexes reveals how probable U.S. individual and institutional investors think a stock market crash is.

Machine learning and big data techniques have been developed making it possible to apply sophisticated mathematical models (hidden Markov switching models, which we will examine later) to financial data series in order to identify market regimes. All this has created scope for innovation in the asset management industry.