Alpesh's Bullish Short-Term Momentum Filter
Medium-high risk - 1-3 month typical holding period - target 20% return
This filter picks out stocks that have simply shown recent upward price momentum. With these stocks, we are hoping to catch the wave and ride it for a short time -s anywhere from a week to 3 months.
I look at this filter when I am bullish on the broader market and want to take a quick advantage. This filter looks for stocks that have just started to rise in price.
My aim is to find stocks that will outperform the market.
Note that this filter looks for momentum over a shorter timeframe than the Bullish Momentum Ranking so stocks in this filter won't necessarily be ranked as A-Grade Momentum stocks.
Because this filter ignores valuations or other fundamentals, it is higher risk. I tend to exit between half and all my position if the price makes a two or three day low.
The other thing to beware is that these stocks may have already made their move. How do we try to determine this?
Let's look at some examples:
Example A: Good choice stock: smooth move upwards, trend intact.
Example B: Okay choice:
Price has made a sharp move upwards and may have completed the move but indicators suggest there may still be room for further growth.
Example C: Patience required
MACD, Stochastic and RSI all moving up but wait for price to break through recent resistance before trading.
Example D: Less interesting stock
Price has levelled out and indicators suggest overbought.
