JPMorgan Says Long Momentum Portfolio Had Its Worst Month Since 1985

JPMorgan's global markets strategy head Dubravko Lakos-Bujas said the bank's long momentum portfolio underperformed the broader market by 11% in October 2026, its worst monthly result in a data series dating to 1985.

JPMorgan characterized the performance as roughly a six-standard-deviation move. The 11% figure describes the portfolio's result relative to the broader market. The bank tied the reversal mainly to a rapid selloff in artificial intelligence-related stocks.

Investors worried that heavy spending on artificial intelligence might not generate sufficient returns and that liquidity was tightening. Hedge funds sold global technology stocks at their fastest net pace since 2016. The Nasdaq 100 ended October down about 5.3% and had its largest single-day decline since the pandemic.

JPMorgan described the selloff as a deleveraging reset within the AI supercycle, rather than the end of that investment cycle. Major cloud providers maintained robust AI capital-spending trends despite weakness in their share prices, the bank's analysis said. Its thesis depends on that spending eventually generating revenue for companies supplying chips, servers and software.

The Relative Strength Index (RSI) on Invesco QQQ, a fund that tracks the Nasdaq 100, dropped below 30. That is the traditional threshold for an oversold reading. RSI measures how quickly and sharply prices have moved.

Other JPMorgan strategists had previously cited slower corporate stock buybacks as a potential headwind to a rapid rebound. The latest view follows JPMorgan's earlier assessment that reduced investor exposure may limit further losses in AI-related stocks.