Momentum trading involves taking advantage of, and making profits from, upward trends in a stock. Momentum traders bet that the stock market’s recent winners will remain winners.
A well known expert in the world of momentum trading is Gary Antonacci, who’s also the author of the award-winning book, “Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk”.
In his book, Antonacci wrote:
“Momentum investing requires a great deal of patience, but when it does work, it works phenomenally well. The key is sticking to your strategy and not letting emotions interfere with your decisions.”
Antonacci’s strategy revolves around the concept of Dual Momentum – which involves combining absolute momentum (a stock’s own recent performance) and relative momentum (comparing the stock’s performance to that of other stocks).
Antonacci advised investors to allocate a portion of their portfolio to stocks that have shown positive absolute momentum over a period. This helps reduce exposure to stocks that are experiencing downward trends.
Common indicators used in the market to signal absolute momentum are the 52-week high and Simple Moving Average indicators – both of which are explained further below.
In combination with that, Antonacci also recommends allocating another portion of the portfolio to stocks with the strongest relative momentum compared to others, which capitalises on the tendency of strong performers to continue outperforming their peers.
A common momentum indicator for measuring relative momentum is the Relative Strength Index, which is also described below.
However, it’s essential to understand that momentum can be cyclical in nature, and that it’s crucial to maintain a long term perspective by understanding each company’s fundamentals.
10 ASX small caps nearest or at 52-week highs
Traders often view the 52-week highs as entry signals.
This is due what’s called the “52-week high effect” – where if a price has broken out above its 52-week range, there must be some factor that generated enough momentum to further continue the price movement in the same direction.
On the other hand, if a stock is far away from its 52-week high, chartists believe the momentum will continue going that way.
10 ASX small caps at 52-week high
(data from Commsec)
Code Name Price How far from 52-Week High? 1 mth return 6 mth return 12 mth return EVE Eve Health Group $0.00 0.00% 0.00% 0.00% 0.00% AEI Aeris Environmental $0.05 0.00% 25.00% 78.57% 25.00% AMO Ambertech $0.29 0.00% 11.54% 23.40% 7.41% CUE Cue Energy $0.10 0.00% 49.25% 53.85% 47.06% CXZ Connexion Mobility $0.03 0.00% 30.00% 8.33% 44.44% VPR Volt Power $0.00 0.00% 100.00% 100.00% 0.00% AAP Australian Agricultural $0.02 0.00% 29.41% 10.00% 37.50% DCC Digitalx $0.07 0.00% 38.78% 88.89% 83.78% TCG Turaco Gold $0.14 0.00% 21.74% 145.61% 115.38% NOR Norwood Systems $0.04 0.00% 18.92% 25.71% 69.23%
Turaco recently announced it has entered into a share sale agreement with Many Peaks Minerals (ASX:MPG) to divest Turaco’s 89% interest in the joint venture entity with Predictive Discovery (ASX:PDI).
The Predictive JV comprises the Ferke, Odienne and Beriaboukro Projects in northern Cote d’Ivoire.
The divestment represents further rationalisation of Turaco’s Cote d’Ivoire exploration portfolio to focus on the Afema Project.
The DigitalX Bitcoin Fund increased 47.9% for the month of February, and the DigitalX Fund increased 36.8%, compared to an increase of 24.1% for the S&P Cryptocurrency Top 10 Equal Weight Index AUD.
Comparatively, the digital asset market outperformed the All Ordinaries Index, which rose 0.6% and gold AUD which rose 1.6% over the month.
“Our DigitalX Fund experienced its best month on record in February, and it’s truly remarkable to watch this transformation in digital asset markets due to demand from the US-based spot Bitcoin ETFs,” said DigitalX CEO, Lisa Wade
10 ASX small caps with prices above SMA
Simple Moving Averages (or SMA) is another indicator that can be used to gauge momentum.
SMA is often used to determine whether a stock price will continue in the same direction, or if it will reverse a bull or bear trend.
As a general rule, if the current stock price is above the SMA, the price trend is up. If the price is below the SMA, the trend is down.
10 ASX small caps at prices above SMA
(data from Commsec)
Code Name Last Price Value Price vs. Simple Moving Average Price vs. 20 day SMA Price vs. 50 day SMA Price vs. 200 day SMA ADN Andromeda Metals $0.03 >5% Above SMA >5% Above SMA >5% Above SMA 0 to -1% Below SMA AEI Aeris Environmental $0.05 >5% Above SMA 1 to 5% Above SMA >5% Above SMA >5% Above SMA BP8 BPH Global $0.00 >5% Above SMA >5% Above SMA >5% Above SMA — AGY Argosy Minerals $0.13 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA BIS Bisalloy Steel Group $2.81 >5% Above SMA 1 to 5% Above SMA >5% Above SMA >5% Above SMA AJL AJ Lucas Group $0.01 >5% Above SMA >5% Above SMA >5% Above SMA 1 to 5% Above SMA AMO Ambertech $0.29 >5% Above SMA 1 to 5% Above SMA >5% Above SMA >5% Above SMA PER Percheron Therapeutics $0.09 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA ASP Aspermont $0.01 >5% Above SMA >5% Above SMA 1 to 5% Above SMA < -5% Below SMA TD1 TALI Digital $0.00 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA
Andromeda has recently executed the settlement of the land purchase agreements for freehold land underlying The Great White Project (TGWP).
The purchase agreements were signed in 2022.
Under the terms, the private land within TGWP’s Mining Lease (ML 6532) was to be subdivided prior to settlement of the sale, with existing property boundaries realigned to fit the TGWP mine site footprint.
The subdivision process and issuing of titles in line with TGWP mine site footprint has now been completed.
Andromeda says TGWP has an initial mine life of 28 years.
A public hearing was recently conducted towards finalising the 10,000tpa Environmental Impact Assessment (EIA) process at the Rincon Lithium Project in Argentina.
No objections were presented by local stakeholders during Public Hearing meeting.
Argosy says there is no impediment to formal regulatory approval, which is now expected to be executed by Salta Secretary of Mining and Energy shortly
10 ASX small caps with low RSI
Here’s another momentum signal used by the market – the Relative Strength Index (RSI).
RSI is a measure of the strength of a stock’s momentum, either in the upward or the downward direction, and is used to indicate whether a stock is oversold or undersold.
Generally speaking, an RSI above 70 means a stock is well bought; and an RSI below 30 indicates that it’s well sold.
An RSI above 80 meanwhile is strongly bought, and an RSI below 20 is strongly sold.
10 ASX small caps at prices with strong over 80 RSI signal
(data from Commsec)
Code Name 2 Day RSI 9 Day RSI 14 Day RSI FGX Future Generation Strong Strong Overbought MCM MC Mining — Strong — IBC Ironbark Capital — Strong — MEI Meteoric Resources NL — Strong — RSG Resolute Mining — Strong — CCM Cadoux Strong Strong — SEN Senetas Corp Strong Strong — TBR Tribune Resources Strong Strong Strong TGP 360 Capital Group Strong Strong Strong NWC New World Resources — Strong —
NWC recently reported that very strong soil geochemistry anomalies have been defined over 1.5km of strike immediately along-trend from the Antler Copper Deposit.
Indicated and Inferred JORC Mineral Resources at the Antler Deposit currently comprise: 11.4Mt @ 2.1% Cu, 5.0% Zn, 0.9% Pb, 32.9g/t Ag and 0.36g/t Au (11.4Mt @ 4.1% Cu-equivalent).
The new soil geochemistry data combined with recently acquired geophysical data reinforces the considerable potential to discover additional mineralisation immediately along strike – both to the northeast and southwest of the Deposit.
The IT security company announced that its majority owned subsidiary company, Votiro Cybersec Global, has launched of its new unified content security platform to provide Data Detection and Response (DDR), combining real-time cybersecurity for data privacy and threat protection.
Senetas says the new platform is going above and beyond disarming and preventing file-borne threats to detecting and responding to data privacy compromises before they occur.
The new platform is the first in the industry to bring together threat prevention, data security, and privacy controls in a Zero Trust DDR solution, and will play a key role in accelerating Votiro’s penetration of the cybersecurity market.
At Stockhead we tell it like it is. While New World Resources is a Stockhead advertiser, it did not sponsor this article.
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