Trump-linked Stock DWAC Jumps 51.18% Due to Probable Merger | Momentum Investing

Shares of Digital World Acquisition (DWAC.O), opens new tab, the blank check firm set to take former U.S. President Donald Trump's social media platform public, rose on Tuesday following his victory in the first Republican contest in Iowa for 2024 presidential race.

The stock rose 15% to $19.76 as the win strengthened Trump's case that his nomination is a foregone conclusion given his massive lead in the national polls.

Digital World Acquisition was the top trending ticker on investor-focused social media site stocktwits.com, indicating chatter among retail traders.

Digital World shares have lost over 93% of their value in the past 12 months as the company's merger with Trump Media & Technology Group, parent of social media platform Truth Social, faced multiple delays since it was announced in October 2021.

While it is uncertain if the deal will go through, the company last month said it expected the merger to close as soon as the first quarter of 2024.

Momentum Investing

On paper, momentum investing seems less like an investing strategy and more like a knee-jerk reaction to market information. The idea of selling losers and buying winners is seductive, but it flies in the face of the tried and true Wall Street adage, buy low, sell high.

Momentum investing is a trading strategy in which investors buy securities that are rising and sell them when they look to have peaked.The goal is to work with volatility by finding buying opportunities in short-term uptrends and then sell when the securities start to lose momentum.Then, the investor takes the cash and looks for the next short-term uptrend, or buying opportunity, and repeats the process.Skilled traders understand when to enter into a position, how long to hold it for, and when to exit; they can also react to short-term, news-driven spikes or selloffs.

Risks of momentum trading include moving into a position too early, closing out too late, and getting distracted and missing key trends and technical deviations.

Top Gainers of This Week

Explore the market movers and top stock gainers in the US stock market, capturing notable surges in stock prices. Stay informed about these movers, leveraging real-time data and historical trends to make informed investment decisions.