Market Curiosity: Exploring Markets And Systems

May 1, 2010

Momentum stocks, aka: momo’s, aka: IBD Top 50 Stocks (updated Feb 2011)

Filed under: Editorials — Tags: , , — Jeff Fitzmyers @ 3:05 pm

Edge: Entering the best stocks with relatively tight stops.

Momentum stocks are fun to swing trade. I use the IBD list of Top 50 stocks (subscription required). The characteristics of a momo stock seems to be:

– Less than 8 years old.
– Less than 30 million shares outstanding.
– Under 30 USD/share.
– Making new all time highs in the past month or two, although the trend can change at any time.
– They seem to be some of the first to rise in a new bull market and some of the first to falter if not crash in a bear market.

The main strategy is to buy on a stop pullbacks to a rising 34 EMA. Take partial profit at about 8% and then trail a stop. Or be stopped out with a 5-10% loss.

A) An okay place to enter a buy stop near the high for the next day.
– Weekly CCI is below monthly CCI and daily CCI is neutral.

B) A great place to enter a buy stop near the high for the next day.
+ Price toched the rising 34 EMA and bounced up
+ EMA’s trending up.
+ Weekly CCI rising and above monthly rising CCI.
+ Daily CCI dipped well enough.

C) Likely coming out of a 4th wave so need to be careful in a bearish or toppy environment.
+ Price tested the 34 EMA and trendline
+ Ema’s still rising.
± Weekly CCI is not all the way low and was downtrending. But the daily CCI was on it’s second clear dip.
– Weekly RSI > 70 but price did not dip to the 170 EMA: keep close stops until price really starts to move up.

Back to How I trade

1 Comment »

  1. This blog Is very informative ,I am really pleased to post comment on this blog .

    Comment by Daniel Harris — November 18, 2011 @ 11:30 pm


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