Navigating US Equities Momentum: Tactical Entry Points and ETF Positioning in a Late-Cycle Landscape

The U.S. equity market in 2025 is defined by a paradox: a surge in intraday trading volume, particularly in low-priced stocks, coexists with a concentration of economic value in high-priced equities. According to a report by the NYSE, stocks trading below $5.00 per share accounted for 26% of share volume over the trailing three months but contributed just 0.8% of notional value tradedNYSE introduces Daily U.S. Equity Market Statistics^[2]. Conversely, stocks priced at $100 or above represented 15% of share volume but 60% of notional valueNYSE introduces Daily U.S. Equity Market Statistics^[2]. This divergence underscores a critical shift in market dynamics, where liquidity and momentum are increasingly decoupled from traditional volume metrics.

Midday Momentum and Tactical Entry Points

Intraday momentum patterns have become a focal point for traders seeking to exploit short-term inefficiencies. Academic research and backtesting suggest that the first and twelfth half-hour returns serve as reliable signals for market timingIntraday Momentum in Equities - Quant Buffet^[4]. For instance, the initial half-hour of trading often reflects overnight news and sentiment, while the final half-hour captures position adjustments ahead of market close. Strategies leveraging these signals—such as taking long or short positions in ETFs or futures and liquidating by close—have demonstrated annualized returns of 4.39% and a Sharpe ratio of 0.98Intraday Momentum in Equities - Quant Buffet^[4].

Midday surges, however, complicate this framework. As noted by J.P. Morgan, U.S. equities positioning is near the 90th percentile, with hedge funds and macro products reversing risk-reduction strategies in July 2025Consider a Tactical ETF for 2025's Market Cycles - ETF Database^[5]. This elevated positioning creates volatility, particularly in midday sessions, where algorithmic trading and institutional flows amplify price swings. Tactical entry points must account for this by incorporating volatility-adjusted thresholds, such as the "noise band" methodology proposed by Carlo Zarattini and colleaguesPaper Review: An Effective Intraday Momentum Strategy^[1]. This approach dynamically scales positions based on intraday volatility, improving robustness in high-uncertainty environments.

ETF Positioning for Late-Cycle Growth

Late-cycle positioning in U.S. equities requires a balance between growth and risk mitigation. BlackRock's 2025 outlook emphasizes an overweight stance in large-cap U.S. equities, citing macroeconomic tailwinds and policy optimism2025 Investment Directions | iShares – BlackRock^[3]. However, the firm also cautions against overexposure to long-duration assets amid trade and immigration policy uncertainties2025 Investment Directions | iShares – BlackRock^[3]. ETFs like the iShares Core S&P Total US Stock Market ETF (ITOT) and the Dimensional US High Profitability ETF (DUHP) exemplify this duality. ITOT offers broad, low-cost exposure to the market, while DUHP targets high-quality, profitable companies—traits historically resilient during market corrections2025 Investment Directions | iShares – BlackRock^[3].

Active ETFs are also reshaping the landscape. Deloitte highlights that assets under management in active ETFs are projected to grow from $856 billion in 2024 to $11 trillion by 2035, driven by their flexibility and transparency2025 Investment Directions | iShares – BlackRock^[3]. Funds like the Direxion HCM Tactical Enhanced US ETF (HCMT) dynamically adjust exposure based on market trends, pivoting to cash during downturns and enhancing long positions in bullish phasesConsider a Tactical ETF for 2025's Market Cycles - ETF Database^[5]. HCMT's 55% net asset value increase over the past yearConsider a Tactical ETF for 2025's Market Cycles - ETF Database^[5] illustrates the appeal of tactical strategies in a late-cycle environment.

Diversification and Macro Risks

Despite the allure of momentum-driven ETFs, diversification remains critical. Morningstar warns of market concentration, with the S&P 500's performance increasingly driven by a handful of large-cap stocks2025 Investment Directions | iShares – BlackRock^[3]. Equal-weight S&P 500 ETFs, such as the iShares S&P 500 Equal Weighted ETF (RSP), mitigate this risk by reducing reliance on dominant names2025 Investment Directions | iShares – BlackRock^[3]. Similarly, international and alternative asset allocations—such as the iShares MSCI Emerging Markets ETF (EEM) or the SPDR Gold Shares (GLD)—provide ballast against domestic volatility2025 Investment Directions | iShares – BlackRock^[3].

Conclusion

The interplay of intraday momentum, midday volatility, and late-cycle positioning demands a nuanced approach. While high-priced stocks dominate notional value and attract tactical flows, low-priced equities persist as volume drivers—often with limited economic impact. ETFs optimized for momentum and diversification, coupled with volatility-adjusted strategies, offer a pathway to navigate this duality. As the market awaits clarity on tariffs, inflation, and policy shifts, investors must prioritize flexibility and quality over rigid momentum bets.