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Buy Momentum Stocks 67% of retail CFD accounts lose money

Best Momentum Stocks to Buy Right Now

Updated: 14 Sep 2021

Momentum trading is one of the easiest styles of trading to follow and if done correctly is one that can bring the biggest rewards. For new traders in particular this is a great style to follow as trades with strong momentum are much easier to manage and tend to have clear entry and exit points, along with strong probability of success.

In this guide we’ll cover a brief recap of what momentum trading is then we’ll bring you our recommended top 5 best momentum stocks to buy, along with predefined entry and exit points.

What is momentum trading?

The basic idea behind momentum trading is that a stock that has started to trend upwards is more likely to continue to rise in price than to fall. The principle is that once price starts going up more and more traders and speculators will be interested in buying. That buying pressure means prices will continue to go up as demand outstrips supply. Once we have an entry in an upwards trending stock we’ll either hold until it hits our predefined exit point or we’ll sell once the momentum ends and the price starts to range or fall.

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Top 5 Momentum Stocks

  1. Petroleo BR
  2. Sony
  3. Disney
  4. Verizon
  5. Papa John's

 

Momentum Stock 1 – Petroleo BR

Petroleo Brasileiro is involved with the exploration, development and production of oil and gas. The stock price saw a huge drop last year but has since established a strong uptrend and is looking on track to regain the losses from 2020. Details of our current trade setup are below:

Petroleo BR Chart

*67% of retail CFD accounts lose money

  • Price is trending in a channel since early April
  • 50 / 100 day moving averages have recently crossed upwards
  • Price is above recent range levels
  • Volume weighted RSI is above 50 and growing
  • Entry below $9.50
  • First target is top of channel at $13
  • Second target is previous resistance at $19.31

 

Momentum Stock 2 – Sony

Our second momentum stock pick is Sony Group, one of the world leading producers of electronic products. Shortages of chips have resulted in slow sales of the PS5 and this coupled with the effect of lockdown on Sony pictures has suppressed the price in recent months, but this has just kept us at the lower end of the price channel, presenting plenty of upside opportunity.

Sony Group Price Chart

*67% of retail CFD accounts lose money

  • Price has been trending upwards in the same channel since early 2020
  • We’re currently at the bottom of the channel showing plenty of upside opportunity
  • Price has recently bounced off the bottom of the channel, starting the next leg up
  • We’ve bounced off the 100 day moving average which lined up with the bottom of the channel
  • RSI is above 50 and rising showing increasing bullish momentum
  • Target is the top of the channel at around $120

 

Momentum Stock 3 – Disney

Our third momentum trade is the Walt Disney Company. Having seen it’s theme park business suffer due to the pandemic and having sales for it’s entertainment products being below target has meant price has been suppressed in recent months. Disney is expected to benefit from pent up demand as we ease out of lockdown restrictions and we’re seeing price respect the bottom of the rising channel it’s been in since March 2020. We’re currently at the bottom of the channel and expecting to see a move up to the top around $120 giving a great risk reward ratio.

Walt Disney Company Price Chart

*67% of retail CFD accounts lose money

  • Uptrend established since March 2020 remains in tact
  • 100 day moving average price is rising and acting as support
  • The $166 price level has been tested as support and cleanly rejected several times
  • RSI is above 5o and moving upwards
  • We appear to be at the start of a move towards at least our previous high of $204

 

Momentum Stock 4 – Verizon

America’s largest telecoms carrier Verizon is our 4th momentum stock pick. The stock looks undervalued in historic terms and is expected to benefit from the rollout of 5G. The stock is popular with dividend investors and we don’t expect it to trade it the current discounted price for long. We’re looking for entries around $56 and expecting at least a move to the $63 – $64 area that has acted as previous resistance.

Verizon Price Chart

*67% of retail CFD accounts lose money

  • The price has been trending upwards in a bullish channel for several years
  • Current price is sitting right at the bottom of the channel – increasing the probability of a move upwards
  • Risk reward ratio is high at this level as we expect a move towards the top of the channel or at least towards previous highs
  • 100 week moving average is acting as current support which also lines up with the 50 Fibo level from the last move
  • Volume weighted average price is rising showing bullish pressure is strong
  • We’re looking for entries around $56 or below with a target of $63 or above

 

Momentum stock 5 – Papa Johns

One of America’s largest pizza restaurants, Papa John’s is our final momentum stock pick. The price has been trending upwards for several years and price is sat right in the middle of the 52 week range, towards the lower end of the rising channel. Support has been established at the bottom of the channel and we’re expecting at the very least for price to return to recent levels in the range of $104.

Pappa Johns Price Chart

*67% of retail CFD accounts lose money

  • Uptrend established since 2019
  • Price sitting towards the lower end of the channel and rising
  • RSI moving out of oversold territory and showing momentum
  • A smaller channel has opened up on the 4H chart and price is also at the lower end of that channel
  • We’re looking for buys around $93 and expecting a move at least to recent highs of $104

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 75 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .