Buying a stock at its 52-week highs can be counterintuitive for many investors because it goes against the traditional idea of buying low and selling high.<\/p>\n
But there are reasons why buying a stock at a 52-week high might be considered.<\/p>\n
For one, it can potentially lead to further gains if the trend persists.\u00a0A stock reaching a 52-week high can signal underlying strength in the company, its industry, or the broader market.<\/p>\n
In addition, when a stock breaks out to a new 52-week high, it can attract the attention of other traders as breakouts often lead to increased buying interest that could propel the stock\u2019s price even higher.<\/p>\n
One expert who likes the idea of buying stocks at their 52-week highs is Mark Minervini<\/strong>, an acclaimed stock market trader and author of the book \u201cTrade Like a Stock Market Wizard.\u201d<\/em><\/p>\n In his book, Minervini discusses his approach to trading, which includes buying stocks breaking out to new highs.<\/p>\n \u201cWhen you buy a stock making a new high, you have to believe that it will go higher, and it often does. Buying new highs is a higher-probability strategy than buying low and trying to sell higher,\u201d he wrote.<\/p>\n \u201cI have found that the best stocks to buy are those making new highs because they have already proven themselves to be winners.\u201d<\/p>\n Minervini believes the 52-week high in particular is a very significant technical level that serves as a reference point for many institutional investors.<\/p>\n He went on to say that the fact a stock is trading at a new high indicates that there is a strong demand for the stock at that price level.<\/p>\n \u201cIn my experience, the biggest winners tend to make new highs along the way.\u201d<\/p>\n \u201cI believe buying a stock that\u2019s trading at a new 52-week high is a higher probability strategy than buying a stock that\u2019s declining.<\/p>\n \u201cIt\u2019s just much easier to make money when a stock is moving up than when it\u2019s moving down,\u201d he noted.<\/p>\n Apart from the 52-week high, there are a couple of other indicators used by the market to signal momentum of any given stock, including:<\/p>\n Simple Moving Average<\/strong> They are all explained below.<\/p>\n \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 MYG Mayfield Group $0.78 0.00% 19.23% 72.22% 80.23% TD1 Tali Digital $0.00 0.00% 33.33% 100.00% 0.00% CTE Cryosite $0.87 0.00% 27.94% — 19.18% GWR GWR Group $0.12 0.00% 16.16% 59.72% 41.98% NTL New Talisman Gold Mines $0.02 0.00% 5.26% 5.26% 33.33% MAH Macmahon Holdings $0.26 0.00% 15.91% 70.00% 82.14% UOS United Overseas $0.61 0.00% 11.93% 22.00% 9.91% TRM Truscott Mining $0.07 0.00% 37.25% 11.11% 48.94% BSE Base Resources $0.25 0.00% 108.33% 47.06% 28.21% VNL Vinyl Group $0.10 0.00% 28.00% 77.78% 92.00% <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n MacMahon Holdings (ASX:MAH)<\/a><\/strong><\/p>\n The mining services contractor has been rising after announcing that it will acquire Decmil Group (ASX:DCG)<\/a> to expand its civil business.<\/p>\n MAH will pay Decmil\u2019s shareholders $0.30 cash per share.<\/p>\n MAH says the acquisition will be earnings accretive, and aligned with Macmahon\u2019s strategic focus to diversify earnings, reduce capital intensity and improve returns.<\/p>\n Having Decmil will also provides an established, scalable foundation to accelerate Macmahon\u2019s civil infrastructure growth.<\/p>\n \u00a0<\/p>\n Base Resources (ASX:BSE)<\/a><\/strong><\/p>\n The critical mineral digger has revealed a proposed 100% acquisition by NYSE-listed uranium and critical minerals producer, Energy Fuels<\/em>.<\/p>\n Energy Fuels will offer 0.026 shares for every Base share as well as a special unfranked dividend of 6.5c per share, valuing the deal at 30.2c or $375 million.<\/p>\n The price is a 188% premium to Base\u2019s last closing price of 10.5c and 173% premium to its 11.1c 20-day VWAP as of April 19.<\/p>\n Base says the merger of the two companies will establish a global leader in the critical minerals sector with a focus on rare earths, uranium and mineral sands production with a clear strategic development pathway.<\/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 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 ADN Andromeda Metals $0.02 >5% Above SMA 0 to 1% Above SMA < -5% Below SMA < -5% Below SMA ADY Admiralty Resources NL $0.01 >5% Above SMA >5% Above SMA 1 to 5% Above SMA 0 to 1% Above SMA CT1 Constellation Technologies $0.00 >5% Above SMA -1 to -5% Below SMA < -5% Below SMA < -5% Below SMA AGY Argosy Minerals $0.14 >5% Above SMA 1 to 5% Above SMA 1 to 5% Above SMA < -5% Below SMA BIS Bisalloy Steel Group $3.40 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA ASE Astute Metals NL $0.04 >5% Above SMA >5% Above SMA >5% Above SMA -1 to -5% Below SMA CYM Cyprium Metals $0.03 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA MYG Mayfield Group Holdings $0.78 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA TD1 TALI Digital $0.00 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA AXI Axiom Properties $0.05 >5% Above SMA >5% Above SMA >5% Above SMA — <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n Admiralty Resources (ASX:ADY)<\/a><\/strong><\/p>\n Admiralty says Admiralty Minerals Chile, its wholly owned subsidiary, has entered into a port receiving, stacking and storage iron ore concentrate service contract with Puerto Las Losas S.A<\/em>.<\/p>\n The contract is for five years, and for the provision of the following services.<\/p>\n Admiralty is currently advancing its flagship Mariposa Iron Ore Project in Chile towards production, targeting first production in 2024, with a view to increasing production capacity from 2025.<\/p>\n \u00a0<\/p>\n Cyprium Metals (ASX:CYM)<\/a><\/strong><\/p>\n The copper company presented an updated 2024 Mineral Resource Estimate (MRE) for its flagship asset, the Nifty Copper Mine in Western Australia.<\/p>\n Nifty\u2019s Measured and Indicated mineral resource has now grown to 119mt at 0.84% pct Cu for 1 million tonnes contained copper.<\/p>\n The company says there is potential to further enhance mineral resource from existing mineralised heap leach inventory.<\/p>\n \u00a0<\/p>\n Here\u2019s another momentum signal used by the market \u2013 the Relative Strength Index (RSI).<\/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 strongly bought; and an RSI below 30 indicates that it\u2019s strongly sold.<\/p>\n An RSI above 80 meanwhile is extremely bought, and an RSI below 20 is extremely oversold.<\/p>\n 10 ASX small caps with RSI over 70:<\/strong> <\/em><\/p>\n Code Name 2 Day RSI 9 Day RSI 14 Day RSI BIS Bisalloy Steel Group — Overbought — ASE Astute Metals NL — Overbought Overbought AXI Axiom Properties — Overbought — BOC Bougainville Copper — Overbought Overbought GLL Galilee Energy — Overbought — KME Kip McGrath Education Overbought Overbought — RDN Raiden Resources Overbought Overbought — CVW Clearview Wealth — Overbought — IMM Immutep — Overbought Overbought SRV Servcorp — Overbought Overbought <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n Immutep (ASX:IMM)<\/a><\/strong><\/p>\n Immutep recently announced preliminary top line results from Cohort B of the TACTI-003 Phase IIb trial<\/em> evaluating its drug, eftilagimod alpha (efti), in combination with current standard of care, KEYTRUDA (pembrolizumab).<\/p>\n The combination is used as first-line treatment of recurrent\/metastatic head and neck squamous cell carcinoma patients (1L HNSCC) with negative PD-L1 expression.<\/p>\n Results show a preliminary 26.9% response rate, the primary endpoint of the study, and Immutep says that these are encouraging.<\/p>\n In addition, Immutep has also partnered with the Centre for Human Drug Research (CHDR) in the Netherlands to study a new drug called IMP761 in humans for the first time.<\/p>\n Under the agreement, CHDR \u2013 a world-class institute in Leiden, the Netherlands, specialising in cutting-edge early-stage clinical drug research \u2013 will perform a first-in-human Phase 1 clinical study of IMP761.<\/p>\n IMP761 is a special antibody that aims to help the immune system work better by restoring balance to the system and address the underlying cause of many autoimmune diseases.<\/p>\n \u00a0<\/p>\n Servcorp (ASX:SRV)<\/a><\/strong><\/p>\n The virtual office services company has been rising after announcing developments from its Middle East operations.<\/p>\n Servcorp said it was recently granted a regional headquarter licence issued by the Saudi Ministry of Investment, the first foreign corporation in the shared workspace sector to obtain this.<\/p>\n \u201cBased on current multiples being achieved in the Saudi market for growth businesses, we could expect to see a significant value uplift for our shareholders, should the transaction be successfully completed,\u201d said the company.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n <\/span><\/p>\n The post Hot Money Monday: Expert says buying stock at 52-week high is better than \u2018buy low \u2013 sell high\u2019 strategy<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nRelative Strength Index<\/strong><\/p>\nSIGNAL 1: 52-week highs<\/h2>\n
\n(data from Commsec)<\/em><\/p>\nSIGNAL 2: \u00a0Simple Moving Average<\/h2>\n
\n(data from Commsec)<\/em><\/p>\nSIGNAL 3: Relative Strength Index<\/h2>\n
\n(data from Commsec)<\/em><\/p>\n