Momentum Trading Strategy

Notes

Selling & Holding Winners

Managing a trade after it starts working: when to take profits, how to stay in big winners, and when to exit.

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Nothing Lasts Forever. Don’t Fall in Love With Any Stock.

Some of the market’s biggest winners over the past year have now broken down. At least for the moment, their runs appear to be over.

AXTI delivered enormous gains over the last year, but it has now fallen below its 50-day moving average and is heading toward the 200-day. Its 10-day and 20-day lines are declining, and the 50-day is beginning to roll over.

LITE, CIEN, VICR, AAOI, VIAV, TTMI, FIX, COHR, and several other former leaders have also broken down or suffered significant technical damage.

Many more are sitting in the danger zone near their 50-day moving averages. That includes the memory names SNDK, WDC, STX, and MU, along with other hot names from hot groups VPG, MBIS, MXL, LSCC, MRVL, TER, VSH, STM, ADI, INTC, TSM, LRCX, COHU, PDFS, and others.

The bottom line is that many of the stocks that have driven this market, particularly the memory, semiconductor, and telecom names, have either already broken down or are now testing a critical area around their 50-day lines.

I have not needed to share many new tickers from week to week because the same names I have discussed throughout the year continued to lead. There was no reason to constantly search for something new when the existing leaders were still working.

But nothing lasts forever.

Many of the stocks that worked all year are now either ending their runs or approaching a decisive point. Do not fall in love with any stock. Respect the price action and let the market tell you whether the trend is still intact.

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Can’t Stop, Won’t Stop: FIX

Comfort Systems USA (FIX) continues to refuse to end its trend.

Every time the stock looks like it may finally need a deeper reset, buyers show up. It has repeatedly found support around key moving averages, including the 10-week and 50-day area, and continues to hold near highs after a massive multi-year advance.

This is what real leadership often looks like. Strong stocks do not always give easy pullbacks. They ride the short-term moving averages, shake out weak hands, and keep pressing higher while traders wait for a better entry that never comes.

The fundamentals still support the move. FIX continues to show strong earnings growth, strong sales growth, high ROE, and a 98 MTS Score.

At some point, every trend ends.

But until price actually breaks, the message is simple:

The trend is still alive.