Top Momentum Stocks in 2024 The Motley Fool

Since the Scores were created to work together with the Zacks Rank, the direction of a stock’s earnings estimate revisions should be a key factor when choosing which stocks to buy. With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey. Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

Relative volume

• There are a lot of high-flying stocks that don’t have particularly great numbers right now.
• This functionality makes the momentum indicator a vital component in the toolkit of traders, especially for confirming the direction and strength of market trends.
• Momentum shows the rate of change in price movement over a period of time to help investors determine the strength of a trend.
• “Likewise, 2026 is off to an unprecedented start achieving record booking volumes in the last three months.”
• And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
• At this point, you may be tempted to think that momentum trading strategies are merely another technical analysis method, but nothing can be further from the truth.
• For example, the RSI is calculated by dividing the average gain of the stock by the average loss over a specific period and then converting the result into a value between 0 and 100.

Benzinga Pro is another excellent tool that combines stock screening capabilities with news feeds, charting and SEC filings. Explore our Trade Together program for live streams, expert coaching and much more. As its name suggests, when the lines converge, the price tends to continue in the direction of the trend. You may be surprised to learn that what looked like a big winner is actually just part of a broader bull market trend and isn’t all that special. Or worse, you may notice it’s lagging its competitors – and at risk of falling behind even if it’s still seeing shares move generally higher. Let’s use iconic electric vehicle company Tesla (TSLA) as a working example.

Carnival Cruise Earnings

Its underwriting margin has averaged almost 20% over the past three years (most insurers are happy if this metric is in the low single digits). Kinsale is the only publicly traded pure play on specialty insurance and has lots of room to grow. This is a highly fragmented industry, and Kinsale makes up a little more than 1% of the market today.

The Moving Average Convergence-Divergence Indicator (MACD)

However, the train moves but at a higher velocity because all of the momentum built up from accelerating is propelling it forward. They will get out and leave you and other unlucky folks holding the bag. If you do manage to time it right, you’ll still have to be more conscious of the fees from turnover and how much they will eat up your returns.

What Technical Indicators Can Momentum Traders Use?

• It’s important to practice and become comfortable with the methods in a simulated trading environment before applying them in real trading scenarios.
• Technical indicators like the relative strength index, moving average convergence divergence, and momentum oscillators are important in momentum trading.
• For example, some equity traders closely watch the Treasury yield curve and use it as a momentum signal for equity entries and exits.
• In other words, it is about buying stocks that are about to soar and selling them at a much higher price.
• Another point to note is that we consider the stock screener as a tool for long-term analysis.
• This indicator operates on the principle that price retracements within specific levels can reveal discernible market trends.
• Each of these strategies – the pullback strategy and the breakout trading strategy – requires a different level of market analysis and understanding of technical indicators.
• The momentum indicators listed above can be used for mean reversions, range bound markets and trends.

We perform original research and testing on charts, indicators, patterns, strategies, and tools. Our strategic partnerships with trusted companies support our mission to empower self-directed investors while sustaining our business operations. Traders utilize the KST oscillator by observing the relationship between the Green KST Line and the Signal Line.

Best Momentum Scanner Tools

In 2023, Meta’s operating income grew by 62% year over year thanks to double-digit revenue growth and impressive margin expansion. The business generated $43 billion in free cash flow last year, giving it plenty of financial flexibility to return capital to shareholders or pursue attractive opportunities as they arise. Meta’s social media platforms have almost 4 billion monthly active users worldwide and have a massive presence in the digital advertising industry, where the company makes most of its money. It has a dominant 75% share of social network ad spending and roughly one-fifth of all digital ad spending in the United States. Plus, the business has been (successfully) leveraging AI technology to improve engagement and content personalization.

Overbought and Oversold Conditions

• Citi hiked its price target on Royal Caribbean stock to $253 from $204 and kept a buy rating on the shares.
• Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities.
• The best momentum trades come when news of a shock hits, triggering rapid movement from one price level to another.
• Traders can observe if the price moves faster or slower relative to its average behaviour in the past.
• You can also screen for stocks where the stock price is a certain percentage greater than a major moving average (e.g., price 10%, or more, higher than the 50-period moving average).
• Momentum indicators can help identify potential reversals, as they can give you insight into whether the market is overbought or oversold.
• They should be used with other technical and fundamental analysis tools to make informed trading decisions.
• We’ve already analyzed tens of thousands of financial research papers and identified more than 700 attractive trading systems together with hundreds of related academic papers.

“With nearly half of 2025 booked and less inventory remaining for sale than the prior year, we are leveraging strong demand to achieve record ticket pricing,” Weinstein said in the release. “Likewise, 2026 is off to an unprecedented start achieving record booking volumes in the last three months.” The firm also expects Royal Caribbean to announce a long-term plan within the next two quarters, likely in conjunction with its Q3 or Q4 report. Citi said it doesn’t see any reason that the cruise operator can’t achieve $20 per share in earnings.

Understanding Momentum Indicators

Other indicators can be used along with RSI to strengthen this conclusion. To reach the best evaluation, experts generally chart the RSI on a daily time frame rather than hourly. However, sometimes shorter hourly periods are charted to indicate whether it is a good idea to make a short-term asset purchase.

MACD line 1 – Trend Indicator

The hot money finally builds to an extreme, triggering volatile whipsaws and major reversals. Profits rely on market volatility and optimally timing your transactions. For instance, purchasing a security too late in its growth window will reduce returns. Likewise, selling the security too late can also cause the investor to lose money. In addition, some strategies involve both momentum factors and some fundamental factors. One such system is CAN SLIM, made famous by William O’Neill, founder of Investor’s Business Daily.

Closing price compared to moving average

The idea of this strategy is simple – Momentum trading capitalizes on the continuation of existing market trends, leveraging the inertia that drives financial markets. This approach is particularly attractive because it doesn’t require pinpoint predictions about market tops and bottoms. Instead, it focuses on catching the wave of market movements, riding the momentum already established by prevailing trends.

The default setting is 14, but ome traders use 30 to further smooth out the signals. When using momentum indicators, it’s important to remember that they are just one piece of the puzzle. They should be used with other technical and fundamental analysis tools to make informed trading decisions. Using these momentum indicators, you can gain valuable insights into the stock market and make informed trading decisions. Remember that no single indicator is foolproof, and it’s important to use a combination of indicators and other tools to analyze the stock market and identify profitable trading opportunities. In technical analysis, momentum can be a very profitable indicator to follow for trading signals on individual securities.

Rather than identifying overbought and oversold zones, many traders use the RSI to identify divergences. This is where as the price continues to trend, the momentum indicator points the other way. Momentum indicators are useful tools for traders to identify potential market trends. One of the most common ways to interpret momentum indicators is by looking for overbought and oversold conditions. When a stock is overbought, the price has risen too far, too fast, and is due for a pullback.

• This strategy often works best in a trending market where the RSI divergence can signal a potential continuation of the current trend​​.
• By combining four timeframes, the KST effectively highlights the market’s prevailing directional bias.
• One of traders’ biggest mistakes when using momentum indicators is ignoring the market context.
• It’s important to choose instruments with high liquidity and to be aware of any news or events that might impact stock prices.
• Strong growth, improving profitability, and an expanding market opportunity are just a few examples of factors to consider.
• How you use them for each market type could produce a different return on investment.
• I mean, we pretty much know that some of the best traders in the world are those who know how to catch the wave and ride the momentum.

The Debate Over Momentum Investing

• It works similarly to RSI – 14D except for the exponential average of price close of stocks for the previous 14 tradable days is used.
• Overall lists include only NYSE, NYSE Arca and NASDAQ stocks, excluding ETF’s.
• Because they are dealing with stocks that will crest and go down again, they need to jump in early and get out fast.
• Momentum is used in trading to identify stocks with strong price movements and profit potential.
• A trade is initiated when the ADX starts trending upwards, and the asset’s price breaks through the 200-day moving average.
• Past performance is not a guarantee of future returns, but it is often a good indicator of positive trends in a business, which can certainly lead to superior returns over time.
• Aside from trading when the price reaches the ranges between +/-100, traders use the CCI to identify extremely overbought and oversold zones with boundaries at +/-200.

Norwegian Cruise shares rallied nearly 11% Wednesday, now significantly extended from a 20.65 buy point for a double-bottom base. NCLH has been mired in consolidation for 15 months, but the stock jumped 15% this year. CCL stock has been stuck below a ceiling near 20 over the last 15 months. The cruise Stock Momentum giant expects net yields to increase about 10.4% compared to last year, up from its June guidance of 10.25% growth. Carnival Cruise sees adjusted earnings before interest, taxes, depreciation and amortization increasing around 40% to about $6 billion, increasing from its Q2 guidance for $5.83 billion.

Conversely, when a stock is oversold, the price has fallen too far, too fast, and is due for a rebound. Momentum indicators use mathematical calculations to measure the rate of change of a stock’s price over time. There are several types of momentum indicators, each with its unique formula and interpretation.

Higher moving average trendlines signal positive momentum while descending moving average trendlines signal negative momentum. To add to that, moving average convergence divergence (MACD) is calculated using an exponential moving average. For investors who want a more hands-on approach without full-time commitment, many financial and brokerage platforms offer momentum screening tools. These allow you to filter stocks based on momentum indicators, providing a starting point for further research and potential investment. Momentum investors sometimes use two longer-term moving averages (MAs), one a bit shorter than the other, for trading signals. In this case, the 50-day crossing above the 200-day creates a buy signal, while a 50-day crossing back below the 200-day creates a sell signal.

Relative Strength Index (RSI)

The strength of momentum trading is in alignment with the fundamental principle of the market – that trends, once established, tend to persist. This indicator operates on the principle that price retracements within specific levels can reveal discernible market trends. However, in momentum trading, the strategy is actually to enter and exit trades based on these trends rather than attempting to pinpoint the absolute highs and lows of the market. It’s not a secret that knowing how to ride the momentum in trading is a key part of being a successful trader. Different momentum indicators have different formulas and serve different purposes. The most basic momentum indicator compares the last closing price to a previous closing price from a set number of periods ago.

What Is Market Sentiment?

In other words, it is about buying stocks that are about to soar and selling them at a much higher price. Another point to note is that we consider the stock screener as a tool for long-term analysis. Hence, we only update technical indicators like RSI at the end of the day on the basis of adjusted close price rather than using the current price during market hours. Traders buy when prices are starting to rise and sell when they seem to have peaked and momentum has begun to reverse.

A few momentum investors prefer to use even longer-term MAs for signaling purposes. Using a free version of a stock screener can be beneficial for new traders to test the tools and understand their functionality before committing to a paid plan. Many traders consider the MACD indicator to be one of the most reliable momentum indicators. Especially at times when its movement diverges from the movement of price (moves in the opposite direction).

Southeast Asia-based Sea Limited (SE -0.42%) pulled a lot of growth forward during the COVID-19 pandemic. Business then slowed considerably, causing the stock to retreat from its all-time highs before it found momentum again, with a 46% gain barely four months into 2024. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Rather than “buy low, sell high,” momentum trading follows a strategy of “buy high, sell higher.” Fortunately, several alternatives allow retail investors the ability to gain exposure to momentum strategies without the need for intensive personal management. Because they are dealing with stocks that will crest and go down again, they need to jump in early and get out fast.

The Relative Strength Index (RSI) is widely regarded as one of the best technical analysis indicators for momentum trading. It measures the speed and change of price movements, helping traders identify overbought or oversold conditions in a trading asset. Also, its effectiveness in different market conditions makes it a versatile tool for momentum traders. Technical indicators like the relative strength index, moving average convergence divergence, and momentum oscillators are important in momentum trading.

This kind of trading follows the market, rather than buying low and selling high. This momentum can continue in an upward or downward trend, and it is measured by technical indicators. Momentum traders are typically short-term traders – either day traders looking for intraday profits or short to medium term swing traders. Different stock screeners are tailored to accommodate various trading styles, making it crucial to choose the right screener based on a trader’s specific approach. This strategy utilizes the Relative Strength Index (RSI) to identify hidden divergences in price action.

Generally, they look for stocks that are trading above their moving averages as a sign that they will continue moving higher. Alternatively, short-sellers look to capitalize on a stock that’s on a downward trend. Momentum investing can also be a popular strategy among professional investors such as hedge funds. Welles Wilder Jr. in the late 1970s; his “New Concepts in Trading Systems” (1978) is now an investment-lit classic. Once these numbers are charted, they can be compared to thresholds to see if the stock is oversold or overbought.

The CCI value suggests that the S&P 500 has left the oversold zone and may have turned into a ranging or bullish market. The ADX is the average of the -DI and +DI, which are calculated from the comparison of two consecutive ‘lows’ and the respective ‘highs’, using the average true range (ATR). Note that the S&P 500 charts below are used for educational purposes only and do not reflect the current market price of the index.

• Thus, one of the main advantages offered by the ADX is that it can help investors avoid burning up their investment capital by being drawn into trying to trade a trendless market.
• One common strategy is to use a moving average crossover, where you look for the shorter-term moving average to cross above or below the longer-term moving average.
• Momentum trading strategies usually target short-term market movements, making them versatile enough to align with various trading styles, from day trading to longer-term position trading.
• There are many charting software programs and investing websites that can measure momentum for a stock so that investors don’t have to calculate it anymore.
• You can also look for stocks with high relative strength and positive momentum indicators.
• Fortunately, several alternatives allow retail investors the ability to gain exposure to momentum strategies without the need for intensive personal management.
• It’s simple to use short-term and long-term moving averages to spot trending stocks.

You can also screen for stocks where the stock price is a certain percentage greater than a major moving average (e.g., price 10%, or more, higher than the 50-period moving average). Above all, applying proper risk management is a vital part of momentum trading. Additionally, identifying pullbacks and breakouts is another key element in becoming a momentum trader.

Momentum indicators are meant to help traders spot whether the market trend will continue or reverse. Beyond that challenge of identifying stocks with a difficult-to-define “it” factor, it is also important to understand that momentum cuts both ways. Just as some stocks seem to go up illogically just because investors like them, other stocks can crash and burn when Wall Street gives up on them. That’s true regardless of the facts of the news cycle or hard numbers around earnings or sales. Some companies are trading at low levels for good reason and are likely to see further declines.