Trading momentum stocks isn't just about finding the right stocks, it's about finding the right markets. I'm sure you've heard people say: "There's always a bull market somewhere." The problem is, most of you are missing out on trends in the market because you simply aren't looking in the right places.
"There's gold in them thar hills..." Frankie Marvin
Each and every day there are new trends that develop and new momentum stocks that break out to new highs. The problem is, it's very difficult to determine which of these stars will fizzle and which of these stars will bring explosive future gains. It takes a special recipe to put it all together.
First, you have to find the right technical picture. It's easy to find a stock that's breaking out to new highs. One of the easiest ways to do that is to look at a list of stocks making 52-week highs. You can see the same stocks popping up again and again as segments of the market surge higher.
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With the S&P 500 and NASDAQ routinely pushing up through all-time highs, how do you find the few breakout companies that will continue their momentum?
Click below to see Zacks' "secret weapon," plus 9 live tickers it says to buy today.
Plus, until Sunday, June 11 you can download our Special Report, Zacks' 7 Best Stocks for the Next 30 Days free.
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Earnings are the Key
A breakout on price momentum without any earnings momentum behind it is often a short-term move that quickly runs out of gas. When you find stocks that are breaking out from a technical perspective, which are also experiencing intensely bullish earnings estimate revisions, you've got a recipe for success. Not just short-term success, but long-term, sustainable, and most importantly, repeatable success.
Equity markets right now are surging higher on a remarkable quarter of earnings. The S&P 500 as well as the NASDAQ are breaking on through to record highs. Earnings have been powering their moves higher, not just multiple expansion. Finding the perfect momentum stocks to buy means we have to look to where the earnings momentum is the strongest. Where is the pressure building for the eventual volcano-like blow-off top?
A Golden Opportunity
I can tell you that one industry of the market looking to catch investors by surprise is gold stocks. The underlying commodity looks like it's about to break up through the stratosphere. We're seeing correlated assets like the Japanese Yen surge higher. We are also seeing devaluation of world currencies on a grand scale, helping to fuel the bitcoin surge. If you're looking for a way to play these major market trends before they produce the next big momentum stock then you've come to the right place.
Sure, buying Gold ETFs or Gold Miner ETFs is one way to play this trend. But wouldn't it make more sense to only buy the gold stocks which have the strongest earnings picture right now? The companies which have seen several quarters of earnings revisions to the upside. I'm talking about Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks that are not only breaking out to the upside with gold, but also supported by huge increases in their EPS estimates.
Finding gems like this is only a single arrow in our quiver. When it comes to uncovering fresh momentum stocks to buy week-in and week-out we've got a time-tested, proven strategy that's rooted in the strength of the Zacks Rank.
By using our unbiased, mathematical ranking system, you can find stock trades with the high likelihood of success.
Zacks' Best Momentum Stocks
Nowadays, while the markets are setting all-time highs, it's harder to narrow down the number of momentum stocks worth considering. Here's an easy way to do this: Look inside the portfolio service I'm directing, the Zacks Momentum Trader.
Right now, only 9 stocks are targeted by our highly selective radar. Each of these strong, hand-picked and constantly monitored companies has already shown momentum. But our signals now indicate that these rare companies are ready to really catch fire.
I look for explosive profit bursts in as little as a month, and in that spirit you are also invited to download a just-released Bonus Report. Zacks experts mark a handful of Strong Buys for immediate breakout.
I encourage you to look into our trades right away. This unique opportunity ends Sunday, June 11.
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Good Investing,
David
David Bartosiak is Zacks' resident technical and momentum expert. He selects stocks and delivers daily commentary for our Momentum Trader.
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Zacks Investment Research