Momentum Trading Strategy

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$AEHR ×
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Buying Earlier Won’t Fix a Bad Market.

Most of the time in a sideways, choppy market, I’m in cash.

Growth-stock momentum trading needs sustained follow-through. When the market keeps chopping up our setups, preserving capital is part of the strategy.

When I do trade, it’s usually because strong stocks are emerging within strong industry groups, while the market is pushing toward its highs and showing signs of transitioning out of the range. That’s why I was buying AEHR and other names in early August.

During those transitions, I’ve often found pullbacks and cheat entries easier to work with than traditional breakouts. That’s my experience, not an automatic rule.

I adapt to what the market is rewarding, including what my own trades are telling me.

The stock-selection standards stay the same: strong relative strength, earnings and sales growth, industry leadership, and constructive price and volume action. I want volume supporting advances, quieter pullbacks, higher lows, and tightening price action up the right side of the chart.

A cheat entry means buying the turn higher through an earlier buy point within the base, before the standard breakout. A pullback entry means waiting for controlled selling to give way to a defined turn higher.

Neither means buying simply because the price is lower.

My stop is defined before entry, usually below the tight setup, relevant pullback low, or low of entry day provided that distance fits my risk limits.

There are trade-offs. Low cheats face more overhead supply. During transitions, I’m quicker to reduce risk as trades progress, even if that means cutting some off prematurely.

I make selective attempts and build exposure as they work. If the market keeps rejecting those attempts, I return to cash.

Cheat entry below: Buying the turn higher before the standard pivot breakout, with risk defined below the recent pullback low.

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Most Traders Will Notice AEHR After It Breaks Out

The real opportunity is learning to recognize the change before everyone else sees it

AEHR jumped another 10% today, but the move itself is not what has my attention.

This is starting to look like a textbook earnings and sales turnaround story. Earnings went from deeply negative growth to +151% last quarter, while sales accelerated to roughly +40%. More importantly, forward estimates continue to improve. That is exactly the type of fundamental change I want to see.

Institutional ownership is moving in the right direction too, with fund ownership increasing. At the same time, AEHR has surged off the July 29 lows, reclaimed its 50-day moving average, and is now pushing back toward all-time highs.

What makes this even more interesting is that many semiconductor charts are still damaged.

If the group continues to repair, AEHR is showing the characteristics of a stock that could emerge as one of the leaders. Semiconductors have taken the leadership role several times throughout this bull market going back to 2023, so I would not count out another run.

The biggest winners rarely wait until everything looks perfect.

Often, a handful of stocks begin separating themselves first. Fundamentals improve. Relative strength explodes. Institutions begin accumulating shares. Price starts acting differently.

Then everyone notices.

AEHR currently has an 1Yr RS Rating of 98.

This is exactly why I highlighted AEHR in this weekend's Big Picture Market Pulse.

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This Is Why You Track Leadership Before Everyone Else Sees It

On April 8, the market gave us the signal.

We had a follow-through day, the NASDAQ-100 reclaimed key moving averages, including the 50-day and 200-day, and the conversation shifted from defense back toward offense.

But the real edge was not just knowing the market was improving.

The edge was knowing where to look.

When the market gets stronger, I want to be focused on the strongest industry groups and the strongest stocks inside those groups.

That is exactly what we had been tracking for months.

  • Telecom.

  • Computer Data Storage.

  • Semiconductors.

Many of these names were not random new ideas. They had already been showing up in our work, some for months, and some even last year.

So when the market confirmed on April 8, there was no need to bounce around looking for the next hot ticker.

The leadership was already there.

From the April 8 signal to yesterday’s close:

AAOI up 40%

LITE up 12%

CIEN up 12%

VIAV up 30%

SNDK up 81%

WDC up 38%

STX up 53%

TER flat

AEIS down 4%

AEHR up 50%

LRCX up 12%

FIX up 30%

GLW flat

Not every stock works.

That is normal.

But when the market confirms, and multiple stocks from the same leading groups start moving together, that is usually not a coincidence.

That is institutional money flowing into a theme.

Strong market.

Strong industry groups.

Strong stocks.

That is the process.

The goal is not to chase every move.

The goal is to already know where the strength is clustering before the move becomes obvious.

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This Is What Real Leadership Looks Like

It’s not a coincidence.

When we look at the Top 10 Industry Groups right now, we’re seeing clear clustering of strength:

  • Telecom: AAOI, LITE, CIEN, VIAV

  • Computer Data Storage: SNDK, WDC, STX

  • Semiconductors: TER, AEIS, AEHR, LRCX

All showing up in the top groups.

This is exactly how leadership reveals itself.

It’s not just one stock. It’s clusters of strength moving together.

When you start seeing multiple names across the same industry groups all:

  • Breaking out

  • Showing strong relative strength

  • Backed by strong fundamentals

That is not random.

That is institutional money flowing into a theme.

This is how real trends work.

Stay focused on where the strength is clustering, just like we teach in the MTS Course. https://tradingmomentum.substack.com/s/mts-course

How do we find the strongest names in the strongest groups?

Relative Strength Stock Screener.

Use it now as part of the MTS Web App https://momentumtradingstrategy.app/

That’s where the opportunity is.

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