Momentum is the tendency of assets that have gone up in price to continue going up in price - and for assets that have gone down in price to continue going down in price. The reasons behind it are not well understood by academics, but momentum is a property that exists across geographies and asset classes.
The Momentum Score is a system that scores companies based on their one year total returns, excluding the last month of returns. In other words, a momentum score for today will be based on the total returns of a stock from 12 months ago today to one month ago today.
Those that had the greatest returns will have the highest momentum scores, and those with the lowest returns will have the lowest momentum score.
This is a relative measurement, so there will always be approximately the same number of high momentum score stocks regardless of market conditions.
For more information see the paper: Returns to buying winners and selling losers: Implications for stock market efficiency by Jegadeesh and Titman (1993) and On Persistence in Mutual Fund Performance by Carhart (1997).
For more information, please see our Momentum Score Support Topics Page.