One minute, you’re making outrageous gains. Then, in less than a blink of an eye, the market turns and your favorite momentum plays stop working. Even worse, if you don’t get out in time, you stand to lose every cent you made on the run higher… maybe more.
But there’s a way you can monitor momentum stocks. If you know what to watch, you can use the signals in advance to buy momentum names at the right time—and sell before other traders ditch these stocks and drive down prices.
The trick is finding the hot sector or industry that’s leading the pack. Since early 2013, I’ve contended that 3D printing stocks have been “the tell”. These stocks were among the first to shoot higher in January 2013 as the market began its huge push higher. And 3D stocks were also the first popular momentum names to signal trouble ahead at the start of this year. They topped out in early January, social media and other momentum shares don’t peak until early March.
3D’s performance so far this year has flat-out stunk. 3D Systems Corp. (NYSE:DDD) has lost nearly 47% year-to-date. (more)
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