Momentum investing has been shown to be a successful strategy over the long term.<\/p>\n
The strategy essentially involves \u201cbuying high, but hoping to sell even higher\u201d \u2013 which is the counter to the well known strategy of \u201cbuy low and sell high\u201d.<\/p>\n
Entering and exiting trades at the right time is crucial for momentum traders, and poor timing can lead to missed opportunities or losses.<\/p>\n
The goal for momentum traders is to enter into trades at key points in the trend in order to maximise profits.<\/p>\n
One of the best well known momentum traders is the American investor, Richard Driehaus<\/strong> \u2013 the former chairman of Driehaus Capital<\/em> before his death in 2021.<\/p>\n Driehaus, often called the Father of Momentum Investing<\/em>, is known for his focus on growth stocks and his use of momentum investing.<\/p>\n Driehaus has asserted that instead of looking for undervalued stocks, an investor should instead focus on buying high and selling even higher.<\/p>\n The Driehaus Strategy<\/strong>, as it\u2019s known in the market, involves identifying and buying stocks in a strong upward price move.<\/p>\n The key point of the Driehaus strategy is to stay with the stocks if their upward price movement continues, i.e. don\u2019t sell,<\/strong> in order to seek that \u201chome run\u201d.<\/p>\n For traders who are keen on applying his principles, there are several indicators to quantify whether a stock is trading on a 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> Code Name Price How far from 52-Week High? 1 mth return 6 mth return 12 mth return EVE Eve Health Group $0.001 0.00% 0.00% 0.00% 0.00% RIM Rimfire Pacific Mining $0.032 0.00% 68.42% 255.56% 300.00% BLY Boart Longyear $2.970 0.00% 5.32% 96.69% 55.50% GNX Genex Power $0.185 0.00% 5.71% 42.31% 19.35% BHD Benjamin Hornigold $0.260 0.00% 1.96% — 18.18% MIL Millennium Services $1.115 0.45% 2.29% 271.67% 189.61% IPX Iperionx $2.230 0.45% 48.67% 106.48% 141.08% WGB Wam Global $2.100 0.47% 6.06% 7.14% 14.44% NAM Namoi Cotton $0.493 0.51% 1.55% 14.53% 9.44% VLS Vita Life Sciences $1.960 0.51% 3.70% 32.43% 28.95% <\/p>\n WordPress Table Plugin<\/a><\/p>\n Austin Engineering (ASX:ANG)<\/a><\/strong><\/p>\n The mining services and engineering company has been rising after upgrading its half year NPAT guidance by around 18%.<\/p>\n Austin\u2019s H1 FY24 underlying NPAT is now expected to come in between $12-$14 million (versus original guidance of $10-$12 million).<\/p>\n H1 FY24 revenue is expected to come in between $138-$144 million (versus original guidance of $120-140 million).<\/p>\n Austin says the upgraded guidance has been driven by increasing revenue and a sustainable improvement in operational effectiveness across the group.<\/p>\n \u00a0<\/p>\n PharmAust (ASX:PAA)<\/a><\/strong><\/p>\n PharmAust has successfully completed a pre-IND meeting with the US Food and Drug Administration (FDA).<\/p>\n A path has now been outlined to potentially receive an accelerated and full approval of its lead drug monepantel<\/strong>, for the treatment of motor neurone disease\/amyotrophic lateral sclerosis (MND\/ALS).<\/p>\n PharmAust will initiate requirements requested by FDA in preparation to open an IND application for its adaptive Phase 2\/3 clinical study.<\/p>\n Separately, PharmAust has engaged globally renowned experts in MND\/ALS and formed a scientific advisory board (SAB).<\/p>\n The SAB will provide expert advice for the development of monepantel to treat MND\/ALS. The SAB will also support the planning stages for PharmAust\u2019s adaptive Phase 2\/3 clinical study.<\/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> 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 BTR Brightstar Resources $0.01 >5% Above SMA >5% Above SMA 0 to 1% Above SMA 1 to 5% Above SMA FL1 First Lithium $0.29 >5% Above SMA 1 to 5% Above SMA < -5% Below SMA 1 to 5% Above SMA BP8 BPH Global $0.00 >5% Above SMA 0 to -1% Below SMA 0 to 1% Above SMA — ARU Arafura Rare Earths $0.14 >5% Above SMA 1 to 5% Above SMA < -5% Below SMA < -5% Below SMA ATP Atlas Pearls $0.21 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA AUZ Australian Mines $0.01 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA MRD Mount Ridley Mines $0.00 >5% Above SMA 1 to 5% Above SMA 1 to 5% Above SMA < -5% Below SMA GSR Greenstone Resources $0.01 >5% Above SMA 1 to 5% Above SMA 1 to 5% Above SMA < -5% Below SMA BLZ Blaze Minerals $0.01 >5% Above SMA 0 to 1% Above SMA < -5% Below SMA < -5% Below SMA M4M Macro Metals $0.00 >5% Above SMA 1 to 5% Above SMA -1 to -5% Below SMA < -5% Below SMA <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n Alkane Resources (ASX:ALK)<\/a><\/strong><\/p>\n Shallow infill drilling at Kaiser in central NSW has been completed recently, showing higher grades from surface as well as strong continuity of mineralisation at depth.<\/p>\n Both the near surface grades and continuity at depth are encouraging as the company looks to update the Kaiser mineral resource estimate.<\/p>\n Alkane expects to have the final results available in March, and the updated resource completed in March\/April.<\/p>\n The updated Kaiser resource estimate and the recently released Boda resource update will then be combined in a scoping study to demonstrate the size and scale of these deposits, as well as their potential economic value.<\/p>\n \u00a0<\/p>\n Admiralty Resources (ASX:ADY)<\/a><\/strong><\/p>\n ADY has enhanced the value of its Mariposa Fe Project, after recently announcing a Maiden Ore Reserves estimate for its flagship Chilean project.<\/p>\n The Ore Reserves estimate comprises 36.3 million tonnes (Mt) at a cut-off grade of 15% TFe (total iron).<\/p>\n Total Fe concentrate is approximately 14 Mt with a grade of 65% TFe, equivalent to a total weight recovery of 38%.<\/p>\n A total of 83.7% of Ore Reserves are probable and 16.3% are proved, according to a JORC 2012 estimate by Chilean firm Geoinvest SAC E.I.R.L.<\/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> Code Name 2 Day RSI 9 Day RSI 14 Day RSI WNR Wingara Ag Oversold Oversold — CMP Compumedics — Oversold — GRV Greenvale Energy Oversold Oversold — UNT Unith Oversold Oversold — ST1 Spirit Technology Oversold Oversold — UBI Universal Biosensors Oversold Oversold — GDA Good Drinks Australia Oversold Oversold — ZMM Zimi — Oversold — LCL LCL Resources — Oversold Oversold SLR Silver Lake Resources — Oversold — <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n Hillgrove Resources (ASX:HGO)<\/a><\/strong><\/p>\n HGO announced its first copper production from the Kanmantoo underground operation, and the transition to cashflow generation.<\/p>\n Over the next few months, the mine output and copper production are expected to ramp up as the planned additional work areas are established underground.<\/p>\n Operations will be bedded down at Kanmantoo as HGO ramps up to steady stage production.<\/p>\n The company says its attention will now turn to growing the business by converting future exploration and development opportunities.<\/p>\n \u00a0<\/p>\n Mount Burgess Mining (ASX:MTB)<\/a><\/strong><\/p>\n MTB has recently issued unlisted options of its shares to Bowden Capital in order to fund the development of the Kihabe \u2013 a Nxuu Zn\/Pb\/Cu\/Ag\/V2O5\/Ga\/Ge project situated on the border with Namibia in Western Ngamiland.<\/p>\n The project covers an area of 1,000sqkm. The project area covers the whole portion of a neo-proterozoic belt, situated on the Botswana side of the border, highly prospective for base metals (Zn\/Pb\/Cu), battery metals (V2O5), precious metals (Ag) and strategic metals (Ge\/Ge).<\/p>\n \u00a0<\/p>\n At Stockhead we tell it like it is. While Pharmaust is a Stockhead advertiser, it did not sponsor this article.<\/em><\/p>\n <\/span><\/p>\n The post Hot Money Monday: This is what the Father of Momentum Investing thought about \u2018undervalued\u2019 stocks<\/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
\n(data from Commsec)<\/strong><\/p>\n10 ASX small caps with prices above SMA<\/h2>\n
\n(data from Commsec)<\/strong><\/p>\n10 ASX small caps with low RSI (Oversold)<\/h2>\n
\n(data from Commsec)<\/strong><\/p>\n