The demand for safety and yield has continued to make momentum investing extremely successful.Not only has the momentum strategy continued to outperform in this environment but it's also provided a strategy that allows investors to blocks out all external noise (such as recession fears) while allowing them to stick with the trends that are working. Here are three examples of so-called "boring" stocks demonstrating the 1-year outperformance versus the Canadian benchmark.
Most fund managers' goal is to outperform the benchmark, so money tends to flow into stocks showing outperformance. When combined with the following technical setup such as a stock breaking out from a base (strong chart pattern) to a new all-time high, this strategy can not only be very powerful, but very profitable. Here are this week's three ideas:
Emotional biases are much harder to correct because they stem from impulse and/or intuition. Often an investor needs to first recognize these issues, then find a way to minimize the effects. Below are the behavioral elements associated with market trends and the psychological forces that drive them.
Many companies trading in the Canadian stock markets such as the TSX and TSX Venture exchange go through periods of consolidation where not a whole lot happens with either the share prices or the fundamentals at the company. This is where technical analysis can be helpful as it provides a bit of a guide as to when these 'quieter' stocks may be set to make a move. Here are a few stock charts with companies poised to trend higher.
The old investing adage “sell in May and go away” may not always hold true to the exact month, but as we enter the dog days of summer, sector rotation is showing up on seasonal cue. Today I'll be focusing on consumer staple and telecom stocks which consistently outperform the TSX index between the months of May and October...
Photon Control (TSXV:PHO) has spent the last 3+ months consolidating within a round bottom continuation pattern. Price action has now begun to breakout from this rounded bottom pattern and above the volume by price accumulation bar. Relative strength vs. the S&P 500 has broken out above its downtrend line as momentum (MACD) begins to curl higher. This price action suggests the bulls are regaining control and the prior uptrend is set to continue...
If you're familiar with my work, you know I'm a huge proponent of momentum investing. For those of you who don't know, momentum investing is a strategy where the objective is to profit from the continuation of trends. The term "trend is your friend" derives from the theory that stocks trending in one direction will continue to go much higher than assumed possible...
Since the goal of many investors is to outperform the market, the relative strength indicator is a very important tool for identifying opportunities. The relative strength indicator is often used to compare the performance of a stock vs. a benchmark such as the TSX index. More importantly, at a time when the TSX is down more than 900 points from the January high, the relative strength indicator can also be used to find pockets of strength.
Since the TSX has very few places to hide in a market downturn, being able to find these pockets of strength can be very profitable...
