Update: Stock Momentum System is Beating the Market by 2.5x

Dec. 23, 2024

I know we just talked about this system on December 2nd but we’ve had quite a week in the markets, so I thought an update was appropriate.

The system we discussed is based on momentum.

Which is based on the idea that hot stocks usually stay hot for a significant period of time.

So, instead of blindly holding and hoping, we buy only the hottest stocks, and then hold them until they’re not hot anymore.

I’ve studied “systems” like this for years and they’ve always fascinated me–mostly because they make so much sense.

Choosing hot stocks and holding them while they’re hot should beat the market.

Right?

Well, I’ve been trying to test that out and have been tracking this sort of portfolio since September.

What’s interesting is that the market fell off a cliff this week due to the Fed disappointing the pie-in-the-sky Bulls. The Bulls want lower rates and many rate cuts next year. The Fed warned that might not happen–and Armageddon broke out.

Yes, the stock market is extremely due for a correction. But Wednesday’s strange reaction to seemingly benign news was a shocker.

So, how would a portfolio built solely on momentum hold up?

Probably not very well.

And it did fall.

But it didn’t fall as badly as the market and it also came roaring back when the market turned on Friday.

As of this writing, the momentum portfolio is killing the market, beating it by 2.5x.

Here are the results: Since I began in September, the momentum portfolio is up 13.1% while the market is up 5.1%.

The stocks change when they lose steam but here is the current portfolio:

The downturn looks like it will knock a few of these out this week, but it sure has captured some winners.

Please let me know if this is interesting to you. I find it fascinating but it doesn’t matter what I like, it matters what you like.

So feedback would be appreciated.

Thanks so much for being a reader. I’ve been doing this since 2013 and I’m still having a blast.

Happy Holidays!

Scott

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It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

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