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For Immediate Release
Chicago, IL – June 1, 2021 – Stocks in this week’s article are Steel Dynamics, Inc. STLD, Harley-Davidson, Inc. HOG and Daqo New Energy Corp. DQ.
Buy These 3 Stocks with Momentum Anomalies for Higher Returns
When value or growth investments fail to fetch sustained profits, one should explore another time-tested winning strategy that simply bets on frontrunner stocks. One of the most successful strategies today is to get in on momentum stocks at the right time.
At the core, momentum investing is buying high, selling higher. It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction than move against the drift. But why does the momentum strategy work?
There’s a whole laundry list of behavioral biases that most investors exhibit. These emotional responses and mistakes are the very reason that momentum strategy works. For instance, some investors are anxious about booking losses and hence hold on to losing stocks for too long, hopeful of a rebound in prices. Meanwhile, a few investors sell their winners way too early.
Furthermore, investors initially tend to underreact to news, events or data releases. However, once things become clear, they tend to go with the flow and overreact, causing dramatic price reactions.
These behavioral problems extend trends, thus opening up huge opportunities for momentum players. So basically, it’s a way to profit from the general human tendency to extrapolate current trends into the future.
Thus, momentum investing is based on that gap in time that exists before the mean reversion occurs, i.e. before prices become rational again.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. So, this strategy is quite tricky to implement, as detecting these trends is no child’s play.
Here, we have created a strategy that will help investors get in on these fast movers and rake in handsome gains. Our screen will help you benefit from both long-term price momentum and a short-term pullback in price.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1618756/buy-these-3-stocks-with-momentum-anomaly-for-higher-returns
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
HarleyDavidson, Inc. (HOG) : Free Stock Analysis Report
DAQO New Energy Corp. (DQ) : Free Stock Analysis Report
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