will dip. If the market climbs, your stockshould also climb. Once you find that your stock is not participating withthe market, exit the trade. Small shares will protect you against excessive losses. Do not fall into the trap of tying up daytrading money by listening to the lure of the investor. Hindsight is your worst enemy as youregularly see stocks such as Qualcomm (QCOM) that move up incredibly in one year. You will tend to think long-term investing is easier thandaytrading, and it is not easier or as profitable.I only enter small positions at one time, to protect the bulk of mycapital, and it has worked for me very well. I like to invest very smallshares (around 200) per trade and keep my investment risk small, but Iexpect at least 10-percent gains per trade. Many times the momentumwill be much greater than expected and often the gain far exceeds myexpectations. Online traders have brought a lot more opportunity intoour market and as their numbers grow, so does the momentum they create. In June of 2000, I advised my traders that Rambus (RMBS) hadstrong-enough momentum to carry it from 57 to a target of over 100within the next few days. A few days later RMBS was trading at 138 (seeFigure 14-2).Those types of trades are whipped cream, but they are a product ofbeing in a good trade to begin with. I do not trade everyday, and I onlymove when the market looks consistent. All I really need are a few goodtrades per month to make very good percentages, far beyond what anymutual fund would make for me.I will normally enter a trade at the end of the day in the last 10 minutes of trading. I have all day to evaluate the merit of the reason for themomentum and estimate who is in the trade. Daytraders will take profits on the next day and cause an initial short-term downturn at open, somany times I will be forced to absorb some selling before the institutionaltraders begin to climb on board for a nice steady climb. It is importantto evaluate the action by looking at a long-term chart and not getobsessed with the short-term oscillations, which is a problem for mebecause of my day-trading background. I tend to get obsessive and watchall the small movements, so I have found it beneficial to my long-termgoals to not watch the stock at all but simply evaluate where the tradeends the day in relationship to the Low and High, trying to develop alonger-term outlook. I feel protected due to the small amount of sharesand the fact that I purchased a good company with an excellent outlookin the next 12 months. Remember the lower priced stocks can be over-
Momentum Investing
1 4 - 2
AMFLY
F I G U R E
237
TE
CHAPTER 14
weighted with daytraders and cause some serious volatility and shouldbe avoided when possible.Always be on the lookout for bargains. As bargains become moreobvious, they bring in bargain-hunters. So be aware of “all-time lows”and consider going shopping. The signs of increasing momentum I lookfor are ending the day well above the mid-range point with a priceincrease from the previous day and increased volume. Look for suddenincreases in volume compared to the previous 200 days. Many times thiswill begin a nice move to the upside that can be very dramatic and profitable. The more popular a stock is, the better. I always watch for signsof bottoming in key stocks that have had their day in the sun and are nowout of favor.For example, in early 2000 I was watching key stocks in the Dowwhen the Nasdaq tech rally was in full swing and many stocks hadclimbed phenomenally. During that time, many Dow stocks were at
238
Trading on Momentum
yearly lows, had solid earnings, and sound business management. Ibought a boatload of bank stocks, retailers, telecoms, fast food, and soon, all trading at bargain prices on the ignored Dow and caught the rotation before it occurred. All of my stocks came off the bottoms to providetremendous gains in a very short period of time. I like to call this common sense chart analysis.
THE LAW OF PARTICIPATIONThe law of participation, simply put, is a big party. News events are theinvitation and momentum traders do not care why the party started; theyare more concerned with who is coming and how long they will stay.The law of participation by definition begins by anticipating ashort-term but consistent move by the market in the direction you expect.A market usually begins a trend and follows that trend for at least a fewdays. The less likely you feel about the general market trend, the less youshould be investing in momentum trades. The bread and butter ofmomentum is “continuing momentum,” which lasts for at least two days.You have two choices when in a successful momentum trade. The firstis to exit with sufficient profits during the climb. The second is riding itout until the day it ends below mid-range. The variables you must ascertain when entering a trade not only the market direction, but also themicro-momentum event that caused the move in the first place.I look at the market in the same way I look at individual stockmomentum. If the market ends the day below the mid-range, I assumethe market is gaining in negative momentum and I will expect a downward trend to begin. When I see that, I will look at my momentum investment positions and consider taking profits even if the stock is ending theday near the upper end of the price range. Stocks that end in the upperprice range indicate upward-continuing momentum, and marketsthat end in the upper portion of the day’s trading range indicate upwardcontinuing momentum. I like to look at the market in light of where ithas been and consider it like a big swinging stock that moves up anddown and becomes predictable the farther it swings in the shortestperiod of time. For example, if I see three days of –200-point drops in theNasdaq I will be looking for signs of buying and a direction change muchmore so than three days of –35-point drops. Time and movement appliesto markets as it does to stocks.
CHAPTER 14
Momentum Investing
239
When the market climbs off recent lows, I will increase my momentum positions and keep the old ones that are still participating, but as themarket begins to look frothy, I will begin to raise cash in anticipation ofa downturn. Remember the law of momentum, which means as a market climbs, profit taking will increase. The quicker it climbs, the moreprofit-taking will occur. A frothy market is one in which you begin to seewild swings up and down and should be considered a danger sign. Thesame thing occurs at the bottoms and you can readily understand it whenapplied to human behavior. When people become excessively worriedor unsure of their actions, they will be more erratic and will change theirminds in a hurry. The market will reflect that action because people arethe cause of momentum, both up and down.Once a momentum stock ends the day below the mid-range, it is thefirst sign of a reversal and a dip. We can never be sure if the dip is themarket or the stock and so you have a choice on that day to exit. If themarket is strong and ending well with the fresh momentum story stocksending nearer the highs and your momentum stock is under the middleof the day’s trading range, it signals the end of the stock’s momentum.Remember we want “participation” and when your stock no longer participates, it is probably under heavy profit-taking because of the climb.When I enter a fresh momentum position, I will expect some profittaking, especially with stocks that have good earnings reports because itseems gamblers are always willing to buy into a stock in anticipation ofgood earnings, and so after the report, they take their profits. This is thetime to look at your trade in light of the 200-day chart and consider thelong-term upside potential. We have some protection against dipsbecause of our long-term outlook and we should be willing to ride a goodcompany for a few years if need be. Personally, I have found momentuminvesting to make incredible profits fairly fast.If you get caught in a long-term momentum position when the market corrects or dumps, you will be forced to ride the position down andwait for a bottom. I was caught in a couple positions when the marketreversed and had to absorb some serious losses. But as the market bottomed and buying returned, I doubled my shares and rode the marketup, recovering the losses. Remember the reason you bought the stock wasbecause it was a participator and was under upward momentum, whichshould occur again once the market reverses again.When I see market bottoms after a big assault by sellers, I willalways go shopping for the latest leaders that have been touted by institutions or for solid stocks with solid earnings, growth potential, and goodmanagement. Many times you will see a lopsided investing cycle, which
240
Trading on Momentum
over-weighs one market such as technologies. When you see this lopsidedness, begin to look for action in the beat-up sectors or the forgotten good companies. I recently spotted a rotation out of the technologiesof the Nasdaq into the brick and mortar companies such as Wal-Mart,Procter and Gamble, and Chase Manhattan and rode some great profitsas institutions began to invest in the good earnings companies again.Long-term momentum can generally be identified by stocks endingthe day above the mid-range under higher than normal volume and agood price climb. Be careful for excessive climbs in one day because thehigher they go in the shortest amount of time, the more likely it is to getbig profit-taking. We are not interested in the daytraders when investing and we will be less inclined to go with cheaper stocks unless we havereason to believe institutions or online investors are interested in thestory. We want the big multiple-day gains, not the small intra-dayswingers. It is OK if your boat floats out with the tide; it will return as itstays with the flow. When it strays out of the flow, exit the boat.I have done very well in the last several years by waiting for bloodand buying when the blood begins to stop flowing. I have bought whenMexico dumped, Asia dumped, oil dumped, and during most of the bigcorrections in the Nasdaq and Dow. Remember that when prices endabove mid-range with increased volume, it is the signal that upwardmomentum is occurring.The strength of momentum investing is that you are willing to rideout the downturns and you do it with very small shares. The easy thingabout it is that you relax with a long-term mentality but capture the shortterm profits. Build a solid platform before you commit to a trade andhave specific expectations. Real momentum is defined by participationwith the market. If the market falls, your momentum stocks will fall. Ifthe market climbs, they will climb.The rules for picking a continuing momentum stock are1. Find a stock that does not sell off with the other gainers duringthe trading day.2. Look for big blocks.3. Find a stock that ends the day with good buying interest and aminimum of profit-taking indicated by finishing the day wellabove mid-range.4. Find a stock that has a good institutional type news event in aninstitutionally led market or a good online investing-type storyif online traders are very busy along with daytraders. Knowyour market.
CHAPTER 14
Momentum Investing
241
THE MARKET’S INFLUENCE ON MOMENTUMINVESTMENTSMomentum investments will not only react to the individual movementswithin the stocks themselves, but also to the general moves of the market, the bigger picture. The general market mood and confidence of themarket as a whole will make up 80-percent of the influence over momentum stocks. So for continuing momentum plays that span over a fewdays, it is important that the market behave somewhat consistently inmood. Anytime the market begins to move up and down erratically fromone day to the next, momentum plays will also move erratically andbecome a frustrating proposition at best. So a basic rule of playing multiday momentum plays is to avoid choppy uncertain markets. Look firstfor a consistently trending market, and anytime you see it changing unexpectedly, exit your positions until the market stabilizes. Familiarity withthe stock market environment is then a key ingredient in understandingthe potential for momentum plays.I like to track the market mood by tracking the stocks that are talkedup by institutions, such as IBM, MSFT, INTC, AOL, JDSU, AMAT, ORCL,BRCD, CHKP, and EBAY. Watching these key players keeps me abreastof the Nasdaq. I have one screen devoted to those key stocks and I havefound that they will move first ahead of technology trends, allowing meto trade ahead of the market move. You can do the same sort of trackingby watching key players within the NYSE, AMEX, Nasdaq, or any othermarket.This is also useful for tracking individual sector movements suchas financial stocks, bio-techs, healthcare, the semi-conductor sector, andso on. Just as the market in general will influence the movement of anindividual stock, the sector movements will also affect the movementsof the stocks. Sectors come into favor and out of favor, according to analyst’s views on the sector, recent new technology, current demand withinthat sector, and so on. The mood and confidence in a stock’s sector at anygiven time will also be a factor in a stock’s momentum. Sectors that arecurrently “hot” will also tend to lead general market direction.I like to find the representative stocks within the current leading sector and watch them trade throughout the day because it allows me asneak preview into the coming momentum of the general market andpossible market direction changes. For example, I may see afternoon selling within my chosen group of stocks that is of slightly greater intensity
242
Trading on Momentum
than the selling of the previous days in a climbing market. This can be akey indication that profit-taking is sneaking into the market, that theupward-trend is turning, and the next day could very well be down. If,on the other hand, my group of leaders climbs more than in previousdays, in a declining market it could be an early tip-off to a market bottom and the signal to go long on sector leaders that are participating. Ialso regularly note the intra-day lows on these key stocks, how far downthey are compared with the open price, and how far up stocks climb offthose lows. The significance of this is that any unusual selling downlower than on previous days can also mean that the market may be turning direction.
DEFINING THE MARKETGenerally, the stock market is looked upon as being either a bear or bullmarket. I would like to clarify the differences and discuss how they willaffect your trading. I generally look at the market like a rubber ballbouncing up and down a set of stairs. A bull market, or an inclining market, is one in which the ball bounces up the stairs. A bear market ordeclining market is one in which the bouncing ball goes down the stairs.With each type of market, you will notice smaller bounces in the opposite direction of the general direction.For example, during a declining market, each buying spree will bemet by more selling and the rises will be less determined. During a bullmarket, each dip will be met with buying that overcomes each bottomand we will see new highs. The stock market on a daily basis is the rubber ball and it bounces up and down to some low and some high and itgenerally ends at the low, middle, or high. This bouncing rubber ball iswhat I call macro-momentum and the stairs would be considered the bullor bear market, inclining or declining. For example, if the market hasbeen moving up for a year, I would consider that to be an inclining market and we make the best money in such environments, especially if weare trading our retirement accounts.So the day’s action will reflect the general direction of the marketand dips will get bought when stocks retreat and also when the marketretreats. We depend on consistency in the direction of the market to makemoney playing momentum. So basically we feel that once a trend develops, we play it until it reverses. When a trader is unsure about the general direction of the market, it is best to wait it out.
CHAPTER 14
Momentum Investing
243
The bouncing ball or the macro-momentum in which the market ismaking its moves each day is generally considered by looking at the freshgainers and second-day gainers for a fresh peek into the momentum foreach day. I will only look at stocks that are trading over one million sharesof volume that have the best gains. I feel that a market can be best understood by looking at the strongest stocks first and then at the sectors fora consistent interpretation of the daily buying or selling. For example, Iknow that if my strongest stock is trading at $50 and it only sells downat the open by $1 and then rises off that bottom to climb over 10-percent,the stock and the market is considered to be strong. If the strongest stockthat is trading at $50 falls over $4 from the open and only climbs $2, Iknow that the market is under profit-taking pressure and buyers aredwindling. I ignore buyout stocks because they generally will not retreatvery much off the buyout price and generally provide little opportunity.Once I identify my strongest stock, I look for other “like” trades tofollow in that the selling and buying should be somewhat representedby the strongest and the followers should mirror the action. I do notexpect the same type of potential because the news event that is causingthe momentum in the first place will determine the amount of tradinginterest and residual climbs for the next few days. That is why it is important to track the news events, see the reactions for a few days, and relatethat action to the market you are seeing. Even on down days you candetermine the amount of buying interest by watching the stronger andsector stocks that have good volume. I like to judge a market by itsparticipants. For example, I like to see a broad-based buying pattern thatsignals a more sustainable momentum. I like to see most of the techsrally on days in which the Nasdaq is moving up nicely. If we are recovering off recent lows on a good pullback, I will buy a basket of stocks,eliminate the dogs that do not participate the next day, and keep thestrong ones.The only reason an inclining market will turn into a bear market ordeclining market is when the overall fundamentals are changing in oureconomy such as interest rates climbing, governmental problems, orearnings reversals, especially with widely followed stocks such as CSCO.I try to watch my bread-and-butter stocks that continually mirror themarket and note any changes on a daily basis. Until we see change anda good reason for it, we must assume we are in a short-term pullbackif the market goes down for several days; the upside potential is betterthe lower the market goes. Sellers create value and buyers create profittaking. The beginnings of both types of action can be seen in the strong
244
Trading on Momentum
stocks on a daily basis if you know what to look for. Basically, you consider the ending price of each strong stock in relationship to the high andlow of the day. Ending below mid-range is a sign of negative momentum, ending above mid-range is a sign of positive momentum, and ending at mid-range is a sign of neutral momentum.During these short-term pullbacks in an inclining market, I will getmore aggressive, expecting a reversal and a continuation of the upwardmomentum. I judge individual momentum by the ending price in relationship to the high and low of the day and I also judge sectors and thegeneral market by the participants (those stocks with good volume thatare mirroring the market). Anytime I find myself in a trade that is downwhen the rest of the participants are up, I will exit the trade, considering it out of momentum and not participating.The market is made up of two big entities. One is the Dow and theother is the Nasdaq. The Nasdaq is made up of mostly techs and the Dowis larger, older companies like financials and insurance. Many times theywill trade in opposite directions when institutions take their money outof technologies and put it into brick and mortar companies so the differences in each should be kept in mind. I play both markets and lookfor those types of rotations from one into the other. It is important towatch for sector momentum too because many times you will find thesheep following the leaders and sectors can sustain momentum for days,weeks, or months. You can get a feel for what institutions are doing bywatching key stocks that get mentioned time and time again on showslike CNBC by money managers for big firms such as Salomon SmithBarney or Goldman Sachs.Markets that begin in a positive or negative direction are expectedto stay headed in that direction for at least two or three days, allowingroom for profits for the momentum investor. When important numbersare coming out or any important stock market event occurs, such as theFeds meeting, I like to remain in cash to keep my risk at a minimum. Mythinking is to take consistent profits when I can and get out when thereis any uncertainty and I collect my money market profits. A goodmomentum trader is continually learning which news events move bothmarkets and stocks. Upgrades by important brokers, unexpected earnings gains, stock splits, and negative events in important stocks can allbring consistent moves in both the stocks and the market.When big companies are releasing earnings, it can move the market up or down depending on how important the sector is and how manyinstitutions are invested. Many times an important stock will release
CHAPTER 14
Momentum Investing
245
unexpected upside earnings, and other stocks in the sector begin to moveup in sympathy with the reporting stock, which can set up a sector movethat can last through earnings season. The market reacts big with anything unexpected and a smart trader will look for opportunity. I like toapply common sense to the stock market and find it to be importantwhen assessing potential in the market and with trades. Some of our bestmoney managers possess tremendous common sense in their investmentapproach.When I consider the stock market each day, I will look at the low,then the high, and where the market ends the day in relationship to them.If the market ends at or near the highs, I consider it to have buyingmomentum even if it is ending negative on the day. The best upwardmomentum markets end near the highs and in positive territory.Remember the law of time and movement applies to markets as well asstocks and if a market climbs 500 points in two days, it will be due forsome profit-taking and it would be wise to take your profits off the tablewhen the market is looking like it is opening down. When markets opennegatively by looking at the futures of either the Dow or Nasdaq, I consider them to be under negative momentum and if they look like theyare opening up, I consider the momentum to be positive. A quick lookat CNBC 15 minutes prior to the market open can establish the outlookbecause they post the futures all day long.As the day ends, the stocks that have the best momentum going intotomorrow’s market are the ones that are near the highs of the day andhave good buying pace. Those are my candidates for holding long-terminvestments with small shares. I will not enter any long-term positionswhen the market is in severe up and down patterns, which is called a“frothy market.” If I feel there is a chance of the market reversing, I willnot risk my capital with new positions. Remember the rule of momentum in that “time and movement” also applies to the general market,which means the farther the market climbs in the fastest amount of time,the more likely it is to reverse. This applies to the bottoms or dips as wellas the tops.I generally like to look at the news regarding the momentum andonly consider the long-term implications. I need the news to carry someweight and impact earnings dramatically when possible. I like to lookfor sector momentum that indicates institutional or online trader momentum. I also look for turnaround stories. I do not like to play stocks thatare up a huge percentage because of the incentive for profit-taking.
246
Trading on Momentum
I will always look at a long-term momentum play via a 200-daychart. I like to apply common sense to what the chart tells me. For example, if the yearly high was 240 and the stock is trading at 120 and I get agood earnings story, I will expect the potential to be about half-way upto 240, at least, which would put a target at about 180. I look at long-termcharts much like I see narrowing oscillations during a trading day. I lookat the low and then the high and consider the momentum will carry astock off the low up to but not over the high. Remember though that thestock must be under positive momentum or you will forever be chasingstocks that look like they might be bottoming.News almost always begins the momentum, so look for upgrades,earnings stories, or sector stories. Many times you will see a stock thatblows away earnings expectations early in the “earnings season.” Watchthe fellow sector stocks because many times institutions will begin pouring money in other sector-related issues that can be the beginning of ahuge move in anticipation of unexpected increased revenues and earnings. Be careful about chasing increased revenues because many timescompanies will report 100-percent increased revenues, but they spent120-percent in advertising and expansion costs to get those extra revenues. Earnings are the biggie and a smart trader should always considerhow the earnings were increased and how bright the forward-goingfuture looks. Many times companies will try to doctor the results by selling some assets and applying the proceeds to their earnings. Try to identify real earnings by cutting costs or increased product demand and smartmanagerial practices. Try to apply earnings like it was your own hot dogstand and consider your market share, overhead, product demand,expansion potential, the related costs, and the outlook down the road.Try to identify the leaders in each sector because these will be the onesthe institutions will normally buy.I find it very helpful to listen to CNBC and read financial papers toget a feeling of which types of stocks and sectors institutions are interested in. A big keyword with institutions is “undervalued” and manytimes you will hear the same stocks mentioned over and over as favorites.One such example was Cisco (CSCO) before the big drop, and you canalmost chart the institutions by the movement of that one stock. LatelyI have been following Juniper Networks Inc. (JNPR) and Ciena Corp.(CIEN).
Momentum Investing
247
INTERPRETING THE MARKET
AMFLY
I like to apply simple expressions to give an interpretation of what I amseeing during each trading day. I am interested in repeating actions andpatterns that would signal consistent behavior for the next few days. Forexample, when I see all the buying moves during the day countered byimmediate and equal selling, causing narrow movements, small climbs,and small drops, I will state that there is a war between buyers and sellers and describe that as a “see-saw market.” When the market begins to“see-saw” back and forth like that, it is a sign of a market that is on theverge of a change. Those types of markets are generally a nervous affairand anything can happen, which is not a good environment for investing. When the leaders continue to advance during the day, ending nearthe upper end of the day’s price range, I interpret that as being a positive market, and expect continued buying momentum for the next day.The opposite is true when the leaders sell down and end near the lowsof the day. I consider that to be a sign of negative market momentum.
MOMENTUM INVESTMENT EXITSI generally begin to take profits when the trade goes over 10-percentbecause I feel it is best to trade safe rather than sorry. I teach traderseveryday and I am constantly hit with the old “wish I had sold earlier”complaint as traders kept positions that were up 80-percent, but theywanted more. So they held, hoping for 100-percent, and wind up onlygetting 5-percent because of their own greed. Sell when the stock is climbing and don’t allow incredible climbs by one or two trades after you sellto spoil your consistent record of profit-taking. Put greed on the backburner and take the money unless you feel very comfortable with themarket and your momentum stock.When you get signals of a market change, you have your choice toride down the dip or take profits. I think it is wiser to note the winds ofchange and go with the flow. If the Nasdaq is at 5100 and you decide tohold the dip, your decision to hold will be a very difficult one to live with,laden with sleepless nights and sweaty palms, should that dip prove tobe 2,000 points.
TE
CHAPTER 14
248
Trading on Momentum
If the Nasdaq drops 2,000 points and you begin to see buying, lookfor opportunity, because even if the market should continue to dive a bitmore, you are fairly safe in that some type of recovery is most likely closeat hand. I love to buy when fear abounds. I often see traders sell with alarge loss as the pain and fear overtakes them, only to find that wasindeed the exact bottom. The key there lies in your ability to judge thesigns of buying and your ability to look at the situation objectively, taking into account the principles of momentum. You have to be able to separate a dog from a good market participator that is simply down withthe market. I began buying when the Nasdaq was 10-percent off the bottom and still dropping, and when it did bottom, I added more. The reason for this was the certainty that we were fairly close to a bottom. Manytimes the market can bottom and climb fast and high in one day, and Iwas determined not to miss out on such exceptional opportunity.News events will drive the market as well as individual stocks. Thefeds, world events, and inflation are just some of the types of news thatcan drive a market up or down. When a news event hits the market unexpectedly, and I am in momentum trades, I will exit if they begin goingagainst the direction I expected. Once a news event strikes, it can begina whole new attitude of trading that may cause the market to changeagainst my positions. I will also look for opportunity during bad newsevents such as the Mexican peso dropping overnight. I have found thatbad news events create an over-reaction, and many good stocks getslaughtered along with the bad ones. This is the time to go shopping,once the dust clears a bit.I normally watch my momentum play prior to the open, after theopen, and during the day to make sure it is mirroring the leaders. I willwant my trade to gap up with good volume much like the leaders, andI want them to get buying when the leaders climb, to not be sold overand above what I see with my leaders. For example, if my leaders movedown $2 off the highs, I will want my momentum play to also movedown about the same percentage. If I spot overselling during the day andmy trade dips more than the leaders at the open or mid-day, I will suspect my trade is losing its upward potential. If the leaders go on a buying spree and my momentum trade does not, I take note and considerexiting the trade. Remember the reason you got into the trade in the firstplace. It had upward momentum and is expected to continue the trend.When the trend reverses, it is good to take your profits or losses whatever the case may be.I began learning about momentum many years ago by doing handtick charts and watching how each trade affects the movement of the
CHAPTER 14
Momentum Investing
249
prices of stocks under momentum. This taught me that each small movement a stock makes during the day becomes a clue to its larger trend.Momentum players have their finger on the pulse of the market like noothers. We watch the small nuances that few are able to see because weare watching the movements of each individual stock very closelythroughout each day. I took my dog out to the back yard one morningto do her business and when I got back my wife asked me if I saw thestool? “Heck, no!” I told her. She told me I would make a lousy nursebecause the small changes of any health habits can signal upcoming problems and early detection is important to the health of the patient.Momentum players are much like nurses. We watch every little buyingand selling wave as our leaders go through their daily routines.Many times a stock that does not get the same buying wave that theleaders are having one day can experience a downtrend the next. Thesigns that traders may be losing interest can be subtle, so we have to stayaware and watch. Likewise, when a stock does not participate in the sameselling wave as its counterparts, that can signal a very strong trend in subsequent trading days. By watching these subtle signals within the intraday behavior of our stock, momentum is understood and can be playedby the astute momentum investor long-term as well as short-term.
PRE-MARKET GAPSThe general gapping of our leading stocks provides us with a very accurate indication for general