How to find momentum stocks

To find momentum stocks, you can follow these steps: 1. **Understand Momentum Stocks**: Momentum stocks are those that have a sustained increase or decrease in price, indicating a strong bullish or bearish trend. 2. **Consider Key Factors**: - **Timeframe**: Consider the timeframe of momentum, which can range from a few hours to several months or years. This is important for day traders, medium-term investors, or long-term investors. - **Sector**: Look for sectors showing strong momentum, as some sectors may experience momentum while others remain stagnant. - **Volatility**: Evaluate the volatility of momentum stocks, as it directly impacts your trading or investment risks. Determine your risk appetite before investing in momentum stocks. 3. **Use Momentum Indicators**: - **Relative Volume (RVO)**: RVO is the ratio of the average volume over the past ten days to the average volume over the past 91 days. Higher volumes suggest continued interest, while low volume indicates a lack of momentum. - **Relative Strength Index (RSI)**: RSI measures the speed and change of price movement over a 14-trading day period. Values above 80 indicate overbought conditions, while values below 20 indicate oversold conditions. - **Exponential Moving Average (EMA)**: EMA is a type of moving average that gives more weight to recent data. RSI exponential values above 80 suggest the stock has risen too much, while values below 20 indicate an oversold position. - **Moving Average Convergence Divergence (MACD)**: MACD is a trend indicator that helps identify increasing short-term momentum. A positive MACD line 1 value indicates an increasing upward momentum, while a negative value indicates a stronger downward trend. 4. **Use a Stock Screener**: You can use a stock screener to filter stocks based on these momentum indicators. Platforms like Tickertape Stock Screener allow you to apply these indicators to find potential momentum stocks. 5. **Consider Sentiment and Long-term Trends**: - **Sentiment**: Look for stocks with positive sentiment, indicated by consensus Wall Street recommendations or recent positive changes in recommendations. - **Long-term Trends**: Analyze longer-term charts to identify established momentum trends beyond day-to-day price movements. 6. **Risks and Rewards**: Understand that momentum stocks are risky, as they are often speculative and can experience significant volatility. The potential rewards are clear, especially if you're an agile investor. 7. **Learn from Examples**: Study successful momentum stocks, such as Tesla, to understand the potential for long-term gains. However, be aware that momentum can cut both ways, and losses are possible if you time the market incorrectly. By following these steps and using momentum indicators, you can effectively find and analyze momentum stocks to make informed trading or investment decisions.