Sunday, January 30, 2011

How I find stocks with momentum...

There are two major ways that I find stocks with momentum.

Firstly, I screen for stocks that are up by more than 5% on volume that is at least 1.5X greater than the average 50 day volume. For this I use Finviz.com. I generally look for stocks that are priced below $10.00, have traded at least 200,000 shares on the day and are breaking out of, near breaking out of or not too far extended from a bottoming base or a continuation base. I then use finviz.com to quickly look for recent news and the reason behind the move. I also look at the Country, market cap, float, sector/industry, and earnings/sales growth of the stock. I combine all this information to formulate an opinion of how the trend is likely to play out and how long it will likely last.I also do the same for stocks down 5% or more on above average volume.

Secondly, I use Twitter, sites like Timothysykes.com, stockbee.blogspot.com, and investorslive.com, and emails from stock promoters like stockrich.com and coolpennystocks.com to generate ideas. If I see an interesting tweet or post on a blog about a particular stock I will look at the chart to see if it meets the criterion I outlined above.

Any ideas that I like from the searches above I add to a watch list in Freestockcharts.com. Occasionally I will find a stock I want to buy into the close of trading or the next day. However, generally I will wait a few days for the stocks to form a clean pattern.

And that is how I find momentum stocks!

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