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3 Hot Momentum Trading Areas to Buy: Space, China, Nuclear
"A body in motion stays in motion." ~ Isaac Newton
What is Momentum Stock Trading?
Momentum traders are those investors who identify strong uptrends and bet they will continue to move in the same direction (which they tend to). These investors believe that, like paddling a canoe in a river, moving with the current is far easier than trying to fight it.
Instead of attempting to catch the bottom, these investors are okay with missing part of the move to increase their risk-to-reward profile. If executed properly, this strategy can be powerful. Remember, the easiest method to find the next big stock is to latch onto a stock already moving. The best momentum stocks have the following traits:
· A "hot" industry group: Stocks of a feather tend to flock together. The best momentum stocks can be found in innovative and disruptive industry groups.
· Robust price and volume action: By definition, momentum stocks move up as their volume turnover is above average (a sign of accumulation).
· High short interest or a catalyst: Short interest and/or a bullish catalyst can act like rocket fuel for a stock.
Below are the three hottest momentum trends (and a stock to buy in each) in the current market climate:
1. Space/Satellite Stocks
Elon Musk's SpaceX has led to a renewed interest in the space industry. The private space company has solved the reusability problem in rocketry, leading to rock-bottom costs (compared to the past). SpaceX is now responsible for about 90% of Earth's payload to orbit.
Stock to Buy: AST SpaceMobile
SpaceX's monumental innovations have broader implications for the space industry. ASTS is building a satellite network in space that aims to offer mobile connectivity directly to regular smartphones by launching a group of satellites to Low Earth Orbit (LEO).
Last month, SpaceX successfully launched ASTS's first five commercial satellites, which will help the company provide 4g and 5g internet access to remote and underprivileged areas. The company ticks key boxes, including strong price action (+480% YTD), a strong industry (contains stocks like Rocket Labs and a sky-high short interest (~37% of the float is short).
Instead of chasing momentum, I prefer to wait for a momentum stock to pull back before getting involved, which is precisely what ASTS is doing currently.
2. Chinese Stocks
Chinese equities and the iShares Large Cap China ETF exploded last month after the government announced a stimulus package aimed at sparking its fledgling economy. Negative sentiment, a high short interest, and lower interest rates drove the move. Meanwhile, billionaire investor David Tepper added fuel to the fire by saying to "buy everything China" in a CNBC interview.
Stock to Buy: JD.com
Though Chinese equities have cooled off and some investors have locked in profits, the move is likely far from over. Liquidity drives markets, and the Chinese government is intent on providing it. JD has held up better than most Chinese stocks and is testing its 21-day for the first time since breaking out (an attractive reward-to-risk zone). The company enjoys the best possible Zacks Rank #1 (Strong Buy), which is likely to outperform most stocks moving forward.
3. Nuclear Energy Stocks
It is becoming abundantly clear that the artificial intelligence revolution will require an incredible amount of energy that is not currently available. As a result, big tech juggernauts are looking to nuclear companies to provide them with cheap and reliable nuclear energy to power their data centers.
Stock to Buy: Oklo
Oklo is a nuclear company that designs smaller, safer, and more efficient nuclear plants. The price company has a leg up versus the competition because OpenAI CEO Sam Altman is a backer and sits on the board of directors. Shares are up ~75% this week as volume has swelled. At these prices, OKLO is best for aggressive momentum traders. Momentum traders of my style will wait for a pullback to get involved.
Bottom Line
Momentum trading is one of the most powerful investing methods. Space, China, and nuclear stocks provide the best momentum in the current market environment.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: include AST SpaceMobile, Rocket Labs, FXI, JD.com and Oklo
For Immediate Release
Chicago, IL – October 18, 2024 – Today, Zacks Investment Ideas feature highlights AST SpaceMobile (ASTS - Free Report) , Rocket Labs (RKLB - Free Report) , iShares Large Cap China ETF (FXI - Free Report) , JD.com (JD - Free Report) and Oklo (OKLO - Free Report) .
3 Hot Momentum Trading Areas to Buy: Space, China, Nuclear
"A body in motion stays in motion." ~ Isaac Newton
What is Momentum Stock Trading?
Momentum traders are those investors who identify strong uptrends and bet they will continue to move in the same direction (which they tend to). These investors believe that, like paddling a canoe in a river, moving with the current is far easier than trying to fight it.
Instead of attempting to catch the bottom, these investors are okay with missing part of the move to increase their risk-to-reward profile. If executed properly, this strategy can be powerful. Remember, the easiest method to find the next big stock is to latch onto a stock already moving. The best momentum stocks have the following traits:
· A "hot" industry group: Stocks of a feather tend to flock together. The best momentum stocks can be found in innovative and disruptive industry groups.
· Robust price and volume action: By definition, momentum stocks move up as their volume turnover is above average (a sign of accumulation).
· High short interest or a catalyst: Short interest and/or a bullish catalyst can act like rocket fuel for a stock.
Below are the three hottest momentum trends (and a stock to buy in each) in the current market climate:
1. Space/Satellite Stocks
Elon Musk's SpaceX has led to a renewed interest in the space industry. The private space company has solved the reusability problem in rocketry, leading to rock-bottom costs (compared to the past). SpaceX is now responsible for about 90% of Earth's payload to orbit.
Stock to Buy: AST SpaceMobile
SpaceX's monumental innovations have broader implications for the space industry. ASTS is building a satellite network in space that aims to offer mobile connectivity directly to regular smartphones by launching a group of satellites to Low Earth Orbit (LEO).
Last month, SpaceX successfully launched ASTS's first five commercial satellites, which will help the company provide 4g and 5g internet access to remote and underprivileged areas. The company ticks key boxes, including strong price action (+480% YTD), a strong industry (contains stocks like Rocket Labs and a sky-high short interest (~37% of the float is short).
Instead of chasing momentum, I prefer to wait for a momentum stock to pull back before getting involved, which is precisely what ASTS is doing currently.
2. Chinese Stocks
Chinese equities and the iShares Large Cap China ETF exploded last month after the government announced a stimulus package aimed at sparking its fledgling economy. Negative sentiment, a high short interest, and lower interest rates drove the move. Meanwhile, billionaire investor David Tepper added fuel to the fire by saying to "buy everything China" in a CNBC interview.
Stock to Buy: JD.com
Though Chinese equities have cooled off and some investors have locked in profits, the move is likely far from over. Liquidity drives markets, and the Chinese government is intent on providing it. JD has held up better than most Chinese stocks and is testing its 21-day for the first time since breaking out (an attractive reward-to-risk zone). The company enjoys the best possible Zacks Rank #1 (Strong Buy), which is likely to outperform most stocks moving forward.
3. Nuclear Energy Stocks
It is becoming abundantly clear that the artificial intelligence revolution will require an incredible amount of energy that is not currently available. As a result, big tech juggernauts are looking to nuclear companies to provide them with cheap and reliable nuclear energy to power their data centers.
Stock to Buy: Oklo
Oklo is a nuclear company that designs smaller, safer, and more efficient nuclear plants. The price company has a leg up versus the competition because OpenAI CEO Sam Altman is a backer and sits on the board of directors. Shares are up ~75% this week as volume has swelled. At these prices, OKLO is best for aggressive momentum traders. Momentum traders of my style will wait for a pullback to get involved.
Bottom Line
Momentum trading is one of the most powerful investing methods. Space, China, and nuclear stocks provide the best momentum in the current market environment.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.