5 Things You Need to Know About Momentum Stocks

stocksWouldn’t it have been nice to own Plug Power Inc., up nearly 130% so far this year, or Ballard Power Systems Inc., up 287% in the past year and about 60% so far in 2014?

Of course it would have. We received a lot of questions this week from customers about high-momentum stocks such as these. Every investor, it seems, wants in on some of the action.

We are not necessarily recommending the two stocks mentioned above, but we are strong believers in the power of momentum. You need to be careful, though. Sometimes momentum makes sense, and sometimes it sets you up for a disaster.

Regardless, keep in mind momentum works both ways: You can profit handsomely very quickly, or get your portfolio destroyed just as fast.  Read More…

This article has 8 Comments

  1. Francis

    Hi, to find momentum trade you usually have to be ready to trade listed pennystocks and otc stock. The best way to start is to follow people on twitter if you want a list of my top guys just look at my pennystock list that I have made frsen11.

    By the way I dont sell anything. Second, you gotta get into a chatroom like investors underground with Nathan Michaud, or Cameron fous. Go on profitly and look at the different chatrooms and follow some of their picks on twitter before. Third papertrade a lot, use think or swim platform via TD waterhouse and you can have it for free at all time. You have to know technical analysis and frankly fundementals are not necessary.

    Today we all new in the chatroom that citron reasech would blast PLUG around noon on its website and that the guy from citron reasech would be a CNBC around 3 oclock so we all shorted PLUG and we new that the other batterie tickers would crash following the leader (sympathy play, highly colorated) THEN at 3 30 a lot of people were talking about OXGN and an FDA appropval of phase two of some drugs, so we all bought it around 2.42 hoping for an overnight gap and now its at over 5 bucks after hours. Some of the guys sold their shares after hours and some are keeping their shares hoping for a morning spike with a parrabolic move followed by a wash for shorting.

    Look also on yahho finance at the pourcentage gainers to see momentum. Get watchlist from guys like tim gritanny, parrabol 28, jason bond, tim sykes, supertrader paul, etc. These guys are the guys that look for momrntum all the time, look at who they follow on twitter and them up, then you get an army of guys talking about momentum stocks for daytrade or swing trade. Lastly you have to be in front of your computer and watch level 2 to see a stock spike up in the morning and crash on the same day.

    You also need 3 or 4 brokers to be able to locate hard to borrow pennystocks to sell stocks. Use the power of the collective to know whats hot.

  2. Jaya

    One of the worst things new investors can do is to try to time the market and even worse is to make your investment decisions based on past performances.

    The key to making smart choices is to do your research and learn more about the underlying management and future plans. It has worked for me for 20+ years.

  3. Uriah D.

    Watching for strong earnings growth and analysts revisions is a good start in knowing when to buy and when to sell. I never really considered it that way before but interesting. Thanks for the article.

  4. Chaim H

    The problem with people following such trends is that everyone is doing the same. So caveat emptor if you don't do your own analysis and come to your own conclusions.

  5. Willem H.

    I hate it when alaysts begin revising #s the moment earnings reports are released. For example when Apple released good results (higher than expected) most analysts revised their numbers up. And then the following quarter Apple didn't meet and so the revised down. It is like these people dont know what they are doing and just following the trends.

  6. Alfredo B

    Why am i the last person to know which are the great picks for the year. How do these people find them so fast?

  7. Geoffrey

    There are no sure fire ways to watch over momentum stocks. If there were we'd all be rich. There will always be winners and losers. That is how the stock market works.

  8. Sable C

    I've been more a chartist and enjoy breaking down charts to figure out potential trends in good buys. There have been some surprises but the charts don't lie.

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