DEFINITION of 'Market Momentum'

A measure of overall market sentiment, calculated as the change in the value of a market index multiplied by the aggregate trading volume occurring within the index components.

BREAKING DOWN 'Market Momentum'

Market momentum can be a good indicator of overall market changes which are likely to continue in the near future. It is important to understand that momentum considers not only changes in price level, but also volume. For example, if the Dow Jones Industrial Average (DJIA) was up significantly over several trading days, this price movement would be said to have more force, or momentum, if it occurred with heavy trading volume as opposed to low volume.

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