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Zacks.com featured highlights include: Acacia, Virtu and Luminex
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For Immediate Release
Chicago, IL – May 12, 2020 - Stocks in this week’s article are Acacia Communications, Inc. , Virtu Financial, Inc. (VIRT - Free Report) and Luminex Corp. .
3 Momentum Anomaly Stocks Amid Market Volatility
The coronavirus-triggered economic downturn has significantly affected the U.S. labor market, slashing a record 20.5 million workers from nonfarm payrolls in April and dragging the unemployment rate down to 14.7%. Employment tumbled sharply in all major sectors, with particularly heavy job losses in leisure and hospitality. However, Wall Street shrugged off the dismal news about layoffs.
The Dow gained 1.9% closing at 24,331.32 on Friday. Meanwhile, the S&P added almost 1.7% to 2,929.80 and the tech-heavy Nasdaq moved up 1.6% to 9,121.32. With the earnings season winding down and several states reopening their economy, market participants will be monitoring key economic data. While the Fed has used its range of tools to support businesses, it is clear that the economic impacts are far more than anticipated and will be felt long after employees return to work.
With this in mind, reacting hastily to volatile trends can cause more damage to a portfolio’s return than a downturn. When value or growth investing fails to fetch sustained profits, one should explore another time-tested winning strategy that simply bets on the frontrunner stocks. This is known as momentum investing.
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 likely to continue in that direction. There’s a whole list of behavioral biases that most investors exhibit. For instance, some investors are anxious about booking losses and hence hold on to losing stocks for too long, hoping for a rebound in prices.
Meanwhile, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such mistakes. So, it’s a way to profit from the general human tendency to extrapolate current trends into the future. Momentum investing is, thus, based on that gap in time, which exists before the mean reversion occurs i.e. before prices become rational again.
Here, we have created a strategy that will help investors get in on these fast movers when there is a short-term pullback in price, and rake in handsome gains.
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include: Acacia, Virtu and Luminex
For Immediate Release
Chicago, IL – May 12, 2020 - Stocks in this week’s article are Acacia Communications, Inc. , Virtu Financial, Inc. (VIRT - Free Report) and Luminex Corp. .
3 Momentum Anomaly Stocks Amid Market Volatility
The coronavirus-triggered economic downturn has significantly affected the U.S. labor market, slashing a record 20.5 million workers from nonfarm payrolls in April and dragging the unemployment rate down to 14.7%. Employment tumbled sharply in all major sectors, with particularly heavy job losses in leisure and hospitality. However, Wall Street shrugged off the dismal news about layoffs.
The Dow gained 1.9% closing at 24,331.32 on Friday. Meanwhile, the S&P added almost 1.7% to 2,929.80 and the tech-heavy Nasdaq moved up 1.6% to 9,121.32. With the earnings season winding down and several states reopening their economy, market participants will be monitoring key economic data. While the Fed has used its range of tools to support businesses, it is clear that the economic impacts are far more than anticipated and will be felt long after employees return to work.
With this in mind, reacting hastily to volatile trends can cause more damage to a portfolio’s return than a downturn. When value or growth investing fails to fetch sustained profits, one should explore another time-tested winning strategy that simply bets on the frontrunner stocks. This is known as momentum investing.
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 likely to continue in that direction. There’s a whole list of behavioral biases that most investors exhibit. For instance, some investors are anxious about booking losses and hence hold on to losing stocks for too long, hoping for a rebound in prices.
Meanwhile, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such mistakes. So, it’s a way to profit from the general human tendency to extrapolate current trends into the future. Momentum investing is, thus, based on that gap in time, which exists before the mean reversion occurs i.e. before prices become rational again.
Here, we have created a strategy that will help investors get in on these fast movers when there is a short-term pullback in price, and rake in handsome gains.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/919279/3-momentum-anomaly-stocks-to-consider-amid-market-volatility
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.