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Behavioral Dynamics of Momentum and Reversal: A Panel Analysis of Industries and Stocks in the U.S. Technology Sector
- 1 School of Economics and Management, Xiamen University, Selangor, Malaysia
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Abstract
Momentum and reversal effects are critical in understanding stock performance, yet their dynamics within the diverse U.S. technology sector remain underexplored. This study investigates the behavioral dynamics of momentum and reversal, analyzing their effects across the five largest industries by market capitalization in the U.S. technology sector, with particular attention on the top three businesses in each area, as determined by the Yahoo Finance Screener. Using time-series and cross-sectional analyses, this paper examines momentum and reversal effects in the technology sector at the industry and company levels, complemented by Fama-MacBeth regression to control for risk factors. The results reveal distinct patterns: IT services and software applications show strong momentum effects driven by long-term trends (6-month), while consumer electronics and software infrastructure display significant reversal effects linked to short-term (3-month) market volatility. Semiconductors display stable β values with minimal effects. Momentum is more prevalent in large-cap firms (e.g., AAPL, NVDA), while reversal dominates smaller-cap stocks (e.g., HEAR, CRM).
Keywords
Momentum effects, Reversal Effects, Fama-MacBeth Regression
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Cite this article
Yang,Y. (2025). Behavioral Dynamics of Momentum and Reversal: A Panel Analysis of Industries and Stocks in the U.S. Technology Sector. Advances in Economics, Management and Political Sciences,173,91-98.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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Volume title: Proceedings of the 4th International Conference on Business and Policy Studies
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