The concept of momentum is based on Newton\u2019s first law of motion \u2013 which states that an object in motion will continue to stay in motion unless acted upon by an external force.<\/p>\n
Applied to the financial markets, this suggests that a stock on an upward or downward trend is likely to continue on that trajectory, until a significant external factor triggers a change.<\/p>\n
In other words:<\/p>\n
Momentum\u00a0= Trend strength<\/strong><\/p>\n Bullish momentum involves making investments in stocks showing an upward trend. Bearish momentum, on other hand, is all about selling stocks that have fallen steadily.<\/p>\n One of the main benefits of momentum trading is that\u00a0it can generate high returns in a short period of time, especially in volatile markets.<\/p>\n Obviously there\u2019s a bit of risk involved, because in essence, you\u2019re making a decision to buy or sell a stock based on recent buying or selling activities of other traders.<\/p>\n So to be a successful momentum trader, one needs to be able to identify the best stocks quickly and accurately.<\/p>\n The goal for momentum traders is basically to enter into trades at key points in the trend in order to maximise profits.<\/p>\n There are several indicators to quantify momentum, and here we look at three main signals used by the market:<\/p>\n 52-week high<\/strong> \u00a0<\/p>\n Traders often view the\u00a052-week highs\u00a0as entry signals.<\/p>\n This is due what\u2019s called the \u201c52-week high effect\u201d<\/strong> \u2013 where if \u00a0a 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.<\/p>\n On the other hand, if a stock is far away from its 52-week high, chartists believe the momentum will continue going that way.<\/p>\n \u00a0<\/p>\n 10 ASX small caps at 52-week high<\/strong><\/p>\n (data from Commsec)<\/strong><\/p>\n WordPress Tables Plugin<\/a><\/p>\n \u00a0<\/p>\n Clearview Wealth (ASX:CVW)<\/a><\/strong><\/p>\n The life insurance company announced the sale of approximately 39.56 million shares in Centrepoint Alliance(ASX:CAF)<\/a> to COG Financial Services (ASX:COG)<\/a>, at a share price of 33c per share representing total consideration of $13.05 million.<\/p>\n The sale shares represent approximately 19.9% of Centrepoint\u2019s current issued capital.<\/p>\n ClearView first acquired a 24.5% holding in Centrepoint in November 2021, and has held the strategic investment since that date.<\/p>\n Given ClearView\u2019s sole focus on life insurance, ClearView has determined to sell its strategic investment in\u00a0Centrepoint.<\/p>\n \u00a0<\/p>\n Woomera Mining (ASX:WML)<\/a><\/strong><\/p>\n Woomera recently announced that it has received binding commitments for a placement of 233 million shares to professional and sophisticated investors at an issue price of $0.009 per share to raise $2.1m.<\/p>\n The company will use the funds to complete a Reverse Circulation (RC) drilling program totalling ~3,000m across its wholly owned Mt Cattlin project<\/strong>, and its Mt Short JV project<\/strong> with Anax Metals which are both located in a proven lithium belt.<\/p>\n These projects are located 5km and 13km respectively north of Allkem\u2019s Mt Cattlin Lithium mine. Landowner and statutory approvals are now in place for the two programs.<\/p>\n \u00a0<\/p>\n Simple Moving Averages (or SMA)<\/strong>\u00a0is another indicator that can be used to gauge momentum.<\/p>\n 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.<\/p>\n 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,\u00a0the trend is down.<\/p>\n \u00a0<\/p>\n 10 ASX small caps at prices above SMA<\/strong><\/p>\n (data from Commsec)<\/strong><\/p>\n WordPress Tables Plugin<\/a><\/p>\n \u00a0<\/p>\n Brightstar Resources (ASX:BTR)<\/a><\/strong><\/p>\n Brightstar recently announced a Maiden JORC 2012 Mineral Resource Estimate (MRE)<\/strong> at the Link Zone of +21koz @ 1.1g\/t Au from shallow, near surface material at the Menzies Gold Project.<\/p>\n Brightstar has identified the Link Zone as having the potential for early-stage mining opportunities to generate operational working capital that could organically fund exploration and development activities.<\/p>\n The MRE displays favourable orebody characteristics of near surface stacked lodes, oxidised material, likely low strip mining, and is still open at depth and along strike at all three deposits within the Link Zone.<\/p>\n \u00a0<\/p>\n Andromeda Metals (ASX:ADN)<\/a><\/strong><\/p>\n Andromeda also announced an inaugural Mineral Resource Estimate (MRE) for the Chairlift kaolin deposit<\/strong> in South Australia.<\/p>\n Highlights were:<\/p>\n A combined Inferred Resource of 53.5 million tonnes (Mt) of kaolin comprised of 27.0 Mt of Bright White, low titanium kaolinised granite; and 26.5 Mt of rheology modifier kaolin.<\/p>\n The low titanium content of Chairlift CRM, with an average TiO2 of 0.18%.<\/p>\n \u00a0<\/p>\n Here\u2019s another momentum signal used by the market \u2013 the Relative Strength Index (RSI)<\/strong>.<\/p>\n RSI is a measure of the strength of a stock\u2019s momentum, either in the upward or the downward direction, and is used to indicate whether a stock is oversold or undersold.<\/p>\n Generally speaking, an RSI above 70 means a stock is overbought; and an RSI below 30 indicates that it\u2019s oversold.<\/p>\n An RSI above 80 meanwhile is strongly overbought, and an RSI below 20 is strongly oversold.<\/p>\n \u00a0<\/p>\n 10 ASX small caps at prices with RSI Oversold signal<\/strong><\/p>\n (data from Commsec)<\/strong><\/p>\n WordPress Tables Plugin<\/a><\/p>\n \u00a0<\/p>\n Astute Metals (ASX:ASE)<\/a><\/strong><\/p>\n Astute said it has secured a two-year Extension of Term (EoT) on its 100%-owned East Kimberley Diamonds Exploration Licence<\/strong> in Western Australia.<\/p>\n After securing the EoT, the company will now aim to finalise cultural heritage survey matters with the traditional owners.<\/p>\n In addition, Astute will also finalise a proposed Program of Work submission, for an exploration program scheduled to take place in Q2 2024.<\/p>\n \u00a0<\/p>\n Renegade Exploration (ASX: RNX)<\/a><\/strong><\/p>\n Back in late October, Renegade completed drilling at its Cloncurry Project, targeting the Mt Glorious copper-gold prospect which is previously undrilled, and yielded recent rock chip samples up to 17.8% Cu and 14.35g\/t Au.<\/p>\n Located just 7km west of the Mongoose copper-gold prospect, Mt Glorious is Renegade\u2019s second target at the Cloncurry Project given significant outcropping copper-gold in the existing pits and immediate surrounding area.<\/p>\n <\/span><\/p>\n The post Hot Money Monday: How Newton\u2019s first law and these 3 momentum signals could turn trends to profits<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nSimple Moving Average<\/strong>
\nRelative Strength Index<\/strong><\/p>\n10 ASX small caps nearest or at 52-week highs<\/h2>\n
10 ASX small caps with prices above SMA<\/h2>\n
10 ASX small caps with low RSI (Oversold)<\/h2>\n