It is well documented that using momentum as a factor while selecting stocks works. The trend is your friend, right until the end.
For companies to make it into the S&P 500, first they need to pass through the Russell 2000 then the S&P mid cap. The key is to find companies that can go the distance.
When companies exhibit relative strength, positive or negative, I run them through The Magnet™ to find “confirming ideas”. A high Magnet score with strong chart patterns has the chance to become a true life changer. You only need a few per year to make a difference. You only need a couple of “10 baggers” to change things.
For more on this subject, watch my video below.
Having expectations that a company will “begin to work out or become recognized” is often a waste of time. Doing the diagnostic work to make sure a stock with momentum has the “fundamental stuff” to become a Magnet stock is a more sure fire way to make sure you do not miss the superstars.
The new high list is often the best place to find the best ideas. You just need to make sure you are not “buying into a story stock” or showing up too late. Momentum comes first; no one is smart enough to predict the future with certainty. Once you accept that, you can see the trends as they develop and find the magnets as they emerge.
*DISCLOSURE: No relevant position
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