Bullish Momentum Stocks, Technical Analysis Scanner

By combining four timeframes, the KST effectively highlights the market’s prevailing directional bias. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. The surge in AI investment has trickled down to businesses in all industries and of all sizes, and Nvidia is a clear beneficiary. The percentage of stocks in $BCMM above their individual Moving Average per period. Momentum is analogous to a train whereby the train slowly accelerates when it starts moving, but during the ride, the train stops accelerating.

Robo-Advisors with Momentum Tilts

Traders use RSI to identify potential trend reversals and confirm a trend’s strength. These momentum indicators can be used differently depending on the trader’s strategy and risk tolerance. Some traders use them to time their entry and exit points, while others use them as a confirmation tool to validate other indicators or chart patterns. Generally, they look for stocks that are trading above their moving averages as a sign that they will continue moving higher. Alternatively, short-sellers look to capitalize on a stock that’s on a downward trend.

Learn first. Trade CFDs with virtual money.

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company’s earnings outlook, to help investors create a successful portfolio. Positive histogram values indicate a bullish trend (and, just as with the ADX, higher numbers indicate a stronger trend); negative (below zero) values indicate a bearish trend. It is calculated as the difference between the MACD indicator and the signal line.

Momentum Indicators

Professional traders may love the free indicators as they serve a valuable purpose, but the professionals will always rely on the premium indicators in the market. Premium indicators can be more precise, offer more information, and be as flexible as the trader needs them to be, which is why they are premium. KST aggregates multiple rate-of-change calculations, providing a smoothed view of price trends while filtering out market noise.

• Understanding overbought and oversold conditions, divergence, and centerline crossovers can help you better interpret these indicators and make more informed trading decisions.
• They are called « momentum » indicators as the principles behind price movements are similar to the ones used to calculate speed, momentum, and acceleration.
• On the chart below, two kinds of signals can be observed with the momentum indicator divergences (blue lines) and overbought and oversold signals (red circles).
• By using this technique, you should know that you are trading on the backs of other people in the market, and price trends are never guaranteed.
• Swing trading requires a different entry and exit approach than day trading.
• Different momentum indicators have different formulas and serve different purposes.

Free Momentum Indicators

An asset falling in price may find support at the 50 value and bounce off this level again to continue an upward rise in price action. Suppose you invest for six months, and you have $10,000 to invest in each stock. The following month, it climbs to $75; by the end of the third month, it reaches $85. The upward trend continues, with the price increasing to $90 in the fourth month, $95 in the fifth month, and finally hitting $100 in the sixth month. As a result, the investment in Stock A grows from $10,000 to $20,000, reflecting a remarkable 100% increase. Some robo-advisor platforms now offer portfolio options that incorporate momentum strategies.

Moving Average Convergence Divergence (MACD)

Viking Holdings (VIK) jumped 2.6% Wednesday to clear a 37.25 buy point for an 11-week consolidation. Carnival Cruise stock vaulted 7% Wednesday to 20.20, clearing a 19.09 buy point for a cup-with-handle base. Royal Caribbean on Tuesday announced it changed itineraries for eight ships to avoid the storm.

The Debate Over Momentum Investing

– If you hire a professional to do momentum investing/trading for you, they come with high fees as the stock turnover is also substantial. It works similarly to RSI – 14D except for the exponential average of price close of stocks for the previous 14 tradable days is used. An exponential moving average is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. Above all, applying proper risk management is a vital part of momentum trading.

Recent Commentary & News

He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. Of course, once the revenue and earnings are realized, the market usually adjusts its expectations and the price retraces or comes back down to reflect the financial performance of the company. It takes discipline to trade this way because the trade must be closed at the first sign of weakness, and the funds must be immediately placed into a different asset showing strength. To illustrate how momentum investing works, let’s consider a hypothetical scenario involving Stock A and Stock B. Exit when the price is moving rapidly into an overextended technical state.

Choosing a Momentum Scanner

Momentum trading is designed to capitalize on trading opportunities presented by stocks that are strongly trending. The idea of this strategy is simple – Momentum trading capitalizes on the continuation of existing market trends, leveraging the inertia that drives financial markets. This approach is particularly attractive because it doesn’t require pinpoint predictions about market tops and bottoms. Instead, it focuses on catching the wave of market movements, riding the momentum already established by prevailing trends. The strength of momentum trading is in alignment with the fundamental principle of the market – that trends, once established, tend to persist. Each of these strategies – the pullback strategy and the breakout trading strategy – requires a different level of market analysis and understanding of technical indicators.

What Technical Indicators Can Momentum Traders Use?

These automated investment services use algorithms to create and manage portfolios, with some allowing users to tilt their allocations using momentum strategies. Fortunately, several alternatives allow retail investors the ability to gain exposure to momentum strategies without the need for intensive personal management. Because they are dealing with stocks that will crest and go down again, they need to jump in early and get out fast. This means watching all the updates to see if there is any negative news that will spook investors. Early positions offer the greatest reward with the least risk, while aging trends should be avoided at all costs. The opposite happens in real-world scenarios because most traders don’t see the opportunity until late in the cycle and then fail to act until everyone else jumps in.

• Traders typically use technical indicators like moving averages or RSI to confirm the momentum and set tight stop-losses to manage risk.
• In this case, a positive line 2 value would mean a weak downtrend and a negative line 2 value would mean a strong downtrend.
• We’ll also provide information on some of the best momentum scanners available, along with examining the relative advantages and disadvantages of momentum trading.
• For investors who want a more hands-on approach without full-time commitment, many financial and brokerage platforms offer momentum screening tools.
• Exit or take partial profits when crossovers signal potential trend changes.
• Over time, the profit potential increase using momentum investing can be staggeringly large.

Carnival, Cruise Stocks Rally

• Momentum trading is a strategy that seeks to capitalize on momentum to enter a trend as it is picking up steam.
• Momentum indicators are most effective in trending markets and may not be as useful in range-bound markets.
• Additionally, identifying pullbacks and breakouts is another key element in becoming a momentum trader.
• By analyzing price and volume data, you can gain insight into a stock’s price movement’s strength or weakness.
• This means watching all the updates to see if there is any negative news that will spook investors.
• They help traders identify overbought (ready to fall) or oversold (ready to rise) conditions, gauge the trend’s strength, and signal potential entry and exit points.

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. » Growth investors, on the other hand, are more concerned with a company’s financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time. Trading based on trend strength, rather than just on trend direction, increases your chances of being able to maximize potential trend trading profits. Momentum scanners can help you get into a new trend near the beginning and also warn you to take profits and get out before a market reversal occurs. You can also screen for stocks where the stock price is a certain percentage greater than a major moving average (e.g., price 10%, or more, higher than the 50-period moving average).

• Its primary function is to generate buy and sell signals by identifying overbought and oversold conditions in the market.
• The equation compares the last closing price to a previous closing price from a set number of periods ago.
• The Moving Average Convergence Divergence (MACD) is one of the top momentum indicators for trend continuation.
• Kinsale is a specialty insurer, focusing on property and casualty insurance for high-risk businesses and situations where it’s difficult to accurately estimate risk of loss.
• In this section, we will explore some key concepts to help you better understand how to interpret momentum indicators.
• Using a momentum scanner will give you an edge in the market and help you make better and more timely trades.

How to Find Momentum Stocks for Swing Trading

This equation can lead to the drawing of a trendline with varying periods used in the calculation. Gordon Scott has been an active investor and technical analyst or 20+ years.

What is a low float momentum scanner?

It involves holding overnight positions, so closing prices and next-day opening prices impact. If the surge doesn’t happen but remains within your risk management threshold, you can look for another opportunity to buy or sell the next day. Candlestick charts are the best to analyze setups for both day traders and swing traders. A green or white candlestick means the close was higher than the previous close for a particular session, whereas a red or black candlestick indicates a lower finish from the last close.

Instead of the traditional philosophy of trading—buy low, sell high—momentum investing seeks to sell low and buy lower, or buy high and sell higher. Instead of identifying the continuation or reversal pattern, momentum investors focus on the trend created by the most recent price break. Yes, momentum trading strategies have proven to be effective in various market conditions, especially in markets that exhibit strong trends.

This indicator, often overlooked due to its simplicity, is another essential tool. It compares the last closing price with a previous one, typically from 14 periods ago (although some traders use 30 periods for smoother signals). Using momentum indicators to trade is about preference, strategy and the trading environment.

Top 3 Momentum Trading Strategies

These allow you to filter stocks based on momentum indicators, providing a starting point for further research and potential investment. Momentum investors sometimes use two longer-term moving averages (MAs), one a bit shorter than the other, for trading signals. In this case, the 50-day crossing above the 200-day creates a buy signal, while a 50-day crossing back below the 200-day creates a sell signal.

« With nearly half of 2025 booked and less inventory remaining for sale than the prior year, we are leveraging strong demand to achieve record ticket pricing, » Weinstein said in the release. « Likewise, 2026 is off to an unprecedented Stock Momentum start achieving record booking volumes in the last three months. » The firm also expects Royal Caribbean to announce a long-term plan within the next two quarters, likely in conjunction with its Q3 or Q4 report.

Even though low-cost brokers are slowly putting an end to the problem of high fees, this is still a major concern for most rookie momentum traders. Like a boat trying to sail on the crests of waves, a momentum investor is always at risk of timing a buy incorrectly and ending up sunk. Most momentum investors accept this risk as the price for the possibility of higher returns.

Finding the best momentum stocks to now isn’t always about fundamental analysis. There are a lot of high-flying stocks that don’t have particularly great numbers right now. Rather, they are speculative bets on what they will become in the future.

A stock can have all the positive momentum in the world but drop like a rock in reaction to a bad economic report. Using a momentum scanner will give you an edge in the market and help you make better and more timely trades. High or increasing volume is commonly interpreted as a sign that the existing trend has strong momentum. A volume scan requirement might be something like, “Current trading volume greater than 10-day average trading volume”. I have seen the best educators and trading coaches utilizing Trade Ideas to increase profitability.

Using these momentum indicators, you can gain valuable insights into the stock market and make informed trading decisions. Remember that no single indicator is foolproof, and it’s important to use a combination of indicators and other tools to analyze the stock market and identify profitable trading opportunities. The RSI is a popular momentum oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the stock market. The RSI ranges from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.