Momentum Stocks

The Valuator lists the 10-day momentum of over 1,000 stocks. You can rank the stocks in the “10-Day Mom” column and choose the top 100 on the list.  You can do approximately the same thing by scanning the list and estimating the amount of gain needed to be in the top 10% (top 100).  Price Momentum surges, especially if accompanied by volume surges often precede a significant move.  Then, chart hose stocks.  The idea is that these stocks have recently surged, and some of these stocks will be at the beginning of a strong trend..  Look at the chart of a stock to see the context of the surge.  Watch for overhead resistance.  Also, if the stock spikes up and then trades in a flat very narrow trading range, check to see if it is the target of a merger.  We usually ignore such stocks because we view them as having limited gain potential for the amount of risk involved.  

NOTE; Our personal preference leans toward stocks that show a smooth rising pattern rather than a sudden spike.  Often, stocks with smoother rising patterns are lower on the list.  Also, we tend to avoid stocks that have frequent downward spikes, even if the stocks have a robust rising pattern.  There are traders who like to sell enough shares to trigger stop loss orders.  When those orders are triggered, the price of the shares takes a hit.  Then those traders will buy up the shares of the stocks they previously sold (because the price is now lower) in order to capture a small profit when the stock recovers.  If we see that a stock has frequent downward spikes in which the price drops below a close-by moving average, we will avoid it because the pattern shows that stops are often triggered unnecessarily. 

It is important that you personally check the average and daily volume of a stock before investing in it (we cannot do that for you).  Many experienced investors and traders will not buy more than 1% of a stock’s daily share volume. They feel that will enable them to sell more easily (and without influencing price).  

If the letters “ORD” are at the end of a stock’s name, it means “Ordinary” and it is the same as “Common.”