Better Trades Momentum Part III
Below is a MRR and PLR article in category Finance -> subcategory Other.
Better Trades Momentum Part III
Unlocking Stock Momentum: Part III
Summary
Momentum can propel a stock significantly in a short timeframe, offering lucrative money-making opportunities. While stocks may sometimes surge without specific reasons, news headlines often drive these dynamic movements.Understanding Momentum in Stocks
Momentum can propel a stock significantly in a short period, offering remarkable opportunities. Earlier, we discussed recognizing patterns that indicate strong momentum. Sometimes, stocks move without apparent reasons, but often, it's a news headline that triggers significant activity.News-Driven Stock Movements
When a stock reacts to news, it's similar to a momentum trade driven by other factors, but with key differences. News-driven trades unfold faster, and they often impact other stocks within the same sector.Timing a News Trade
News events prompt immediate volume influx as traders react, buying or selling based on positive or negative developments. The most substantial movements typically occur on the first day, with reactions lasting one to three days. Setting diligent stop-loss orders is crucial to capitalize on these trades swiftly.Technical Entries in News Trades
When entering a trade based on news, ensure technical confirmation before proceeding. For instance, with ConocoPhillips (COP) during a recent oil price drop, the downtrend and gap filled provided a solid entry point. Setting stops slightly above the closing price allows you to exit profitably if the stock reverses.COP continued its decline, with further adjustments to stop-loss levels yielding a profit within two days. Tight stops are recommended for these short-lived trades, allowing you to stay in if momentum persists.
Case Study: Las Vegas Sands (LVS)
On January 10th, Las Vegas Sands (LVS) announced approval for a new resort near Macau, sending its stock soaring by over $10. Through scans, I identified LVS's bullish indicators and volume before hearing the news. With a strong price pattern, I entered the trade as it rallied above $94. When a doji formed on the second day, I adjusted my stops and captured further gains, successfully exiting after a $14 rise.Exploring Sector Opportunities
News impacting one stock can affect others in the same sector, providing additional trading opportunities. When oil prices dropped, other oil stocks followed COP’s trend. Similarly, LVS’s announcement boosted the Casino & Gaming sector, prompting moves in stocks like Wynn Resorts (WYNN).After LVS's news, I observed WYNN’s rally, breaking previous highs, and entered the trade. Although WYNN didn’t climb as much as LVS, it still delivered a solid $7 gain.
Conclusion
Momentum trades are frequent, whether triggered by news or increased buying/selling pressure. The key to these strategies lies in technical analysis. By understanding these price patterns, you can enter trades as momentum accelerates.Join me in workshops or explore resources like "Technically Speaking" or "Trend Trading My Way" DVDs to enhance your momentum trading skills.
Looking forward to seeing you!
Markay with Better Trades
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