6 Best Momentum Scanner Tools & Indicators

Among the most popular include the relative strength indicator (RSI), price rate of change (ROC), stochastics, and moving average convergence divergence (MACD). At this point, you may be tempted to think that momentum trading strategies are merely another technical analysis method, but nothing can be further from the truth. Instead, it’s about focusing on the main body of the price movement and leveraging market psychology and herd mentality, which drive prices in a certain direction. Not everyone can be momentum traders, but those who succeed in doing so get a very useful tool to make profits in the markets.

Trend Momentum with ADX

• Kinsale is the only publicly traded pure play on specialty insurance and has lots of room to grow.
• For investors who want a more hands-on approach without full-time commitment, many financial and brokerage platforms offer momentum screening tools.
• You may be surprised to learn that what looked like a big winner is actually just part of a broader bull market trend and isn’t all that special.
• Rather than «buy low, sell high,» momentum trading follows a strategy of «buy high, sell higher.»
• Kinsale had delivered a 36% gain year to date as of mid-April, but its momentum has essentially been going strong since its 2016 initial public offering (IPO).
• In turn, this sets off buying or selling signals for observant players who jump in and are rewarded with instant profits.
• Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism.
• Though «momentum» can refer to fundamental measures of performance, such as revenue and earnings, it is most commonly used in reference to historical asset prices as a technical indicator.

The strength of momentum trading is in alignment with the fundamental principle of the market – that trends, once established, tend to persist. This indicator operates on the principle that price retracements within specific levels can reveal discernible market trends. However, in momentum trading, the strategy is actually to enter and exit trades based on these trends rather than attempting to pinpoint the absolute highs and lows of the market. It’s not a secret that knowing how to ride the momentum in trading is a key part of being a successful trader. Different momentum indicators have different formulas and serve different purposes. The most basic momentum indicator compares the last closing price to a previous closing price from a set number of periods ago.

What are the top momentum stocks?

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Automated trading can be helpful to execute trades with higher accuracy and frequency. Below you find an example of a Momo-scanner that helps you hunt for momentum. First, you configure your scanner by defining values for your preferred filters and alerts.

Top Momentum Trading Tips

Higher moving average trendlines signal positive momentum while descending moving average trendlines signal negative momentum. To add to that, moving average convergence divergence (MACD) is calculated using an exponential moving average. For investors who want a more hands-on approach without full-time commitment, many financial and brokerage platforms offer momentum screening tools. These allow you to filter stocks based on momentum indicators, providing a starting point for further research and potential investment. Momentum investors sometimes use two longer-term moving averages (MAs), one a bit shorter than the other, for trading signals. In this case, the 50-day crossing above the 200-day creates a buy signal, while a 50-day crossing back below the 200-day creates a sell signal.

What is momentum?

They help traders identify overbought (ready to fall) or oversold (ready to rise) conditions, gauge the trend’s strength, and signal potential entry and exit points. Crucially, one of the backbones of momentum trading is recognizing and leveraging volatility in the market. Volatility, in this context, represents the extent of price fluctuations of an asset. Momentum trading strategies usually target short-term market movements, making them versatile enough to align with various trading styles, from day trading to longer-term position trading. The key is to identify the asset of interest, devise a strategy based on technical analysis and indicators, and then execute trades in live markets. There are several momentum indicators that technical analysts can use in momentum trading.

Top Momentum Indicators

You can also screen for stocks where the stock price is a certain percentage greater than a major moving average (e.g., price 10%, or more, higher than the 50-period moving average). Above all, applying proper risk management is a vital part of momentum trading. Additionally, identifying pullbacks and breakouts is another key element in becoming a momentum trader.

• To identify divergence, traders often compare a stock’s price to the moving average convergence divergence (MACD) or the relative strength index (RSI).
• The potential payday from momentum stocks is clear, particularly if you’re looking at historic success stories like Tesla.
• The RSI ranges from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.
• Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger.
• While not directly indicative of momentum, moving averages are instrumental in helping traders determine if a market is confined within a range or exhibiting a clear trend.
• If the price is making higher highs, but the momentum indicator is making lower highs, it may be a sign of bearish divergence.
• Momentum investing seeks to take advantage of market volatility by taking short-term positions in stocks going up and selling them as soon as they show signs of going down.
• This kind of trading follows the market, rather than buying low and selling high.

RSI Exponential 14D

When the Green KST Line is above the Signal Line, it is a signal to buy, indicating a bullish trend. Conversely, when the Green KST Line falls below the Signal Line, it is a signal to sell, suggesting a bearish trend. By understanding the fundamentals of the KST oscillator and incorporating it into their trading systems, traders can make more informed decisions and improve their overall trading performance. We explain and test four popular momentum indicators for reliability and to deduce the best settings for traders. Momentum investing can be a great way to identify opportunities, but like any other investment strategy, it isn’t perfect.

The Momentum Indicator

Generally, they look for stocks that are trading above their moving averages as a sign that they will continue moving higher. Alternatively, short-sellers look to capitalize on a stock that’s on a downward trend. Momentum investing can also be a popular strategy among professional investors such as hedge funds. Welles Wilder Jr. in the late 1970s; his «New Concepts in Trading Systems» (1978) is now an investment-lit classic. Once these numbers are charted, they can be compared to thresholds to see if the stock is oversold or overbought.

Related investing topics

The default setting is 14, but ome traders use 30 to further smooth out the signals. When using momentum indicators, it’s important to remember that they are just one piece of the puzzle. They should be used with other technical and fundamental analysis tools to make informed trading decisions. Using these momentum indicators, you can gain valuable insights into the stock market and make informed trading decisions. Remember that no single indicator is foolproof, and it’s important to use a combination of indicators and other tools to analyze the stock market and identify profitable trading opportunities. In technical analysis, momentum can be a very profitable indicator to follow for trading signals on individual securities.

Moving Average Convergence Divergence (MACD)

• A low float momentum scanner identifies stocks with low float and combines this filtered universe of stock with unfolding momentum.
• The top momentum stocks are those that have recently outperformed the S&P 500 and have excellent fundamentals in their underlying businesses.
• The MACD indicator compares a longer exponential moving average (EMA) with a shorter-term EMA to produce the MACD line, followed by a histogram and a signal line.
• It is important to use momentum indicators in conjunction with other technical analysis tools and market context.
• You can use technical analysis tools like volume, moving averages, and trend lines to identify momentum stocks for intraday trading.
• As a result, they may not always provide accurate signals for future price movements.
• Trend following is a popular approach that involves identifying the direction of the market trend and then entering trades in the same direction.

Gordon Scott has been an active investor and technical analyst or 20+ years.

This kind of trading follows the market, rather than buying low and selling high. This momentum can continue in an upward or downward trend, and it is measured by technical indicators. Momentum traders are typically short-term traders – either day traders looking for intraday profits or short to medium term swing traders. Different stock screeners are tailored to accommodate various trading styles, making it crucial to choose the right screener based on a trader’s specific approach. This strategy utilizes the Relative Strength Index (RSI) to identify hidden divergences in price action.

• Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.
• Using a combination of top momentum indicators could clarify the signal given by one indicator.
• Crucially, one of the backbones of momentum trading is recognizing and leveraging volatility in the market.
• Momentum indicators are powerful tools that help traders identify the strength and direction of a trend.
• Generally, pullbacks and breakouts are a big thing in momentum trading, largely because they provide a good entry opportunity during an ongoing trend.
• Instead of seeking out undervalued stocks, Driehaus focused on companies showing strong growth and a rising price.
• The Relative Strength Index (RSI) is the most commonly used momentum trading indicator.

Carnival, Cruise Stocks Rally

Momentum indicators are powerful tools that help traders identify the strength and direction of a trend. However, interpreting these indicators can be challenging for beginners. In this section, we will explore some key concepts to help you better understand how to interpret momentum indicators. As an individual investor,  momentum trading will most likely lead to overall portfolio losses. When you purchase a rising stock or sell a falling one, you’re likely reacting to older news than the professionals at the head of the momentum investing funds.

Market momentum indexes provide momentum indicators for various market sectors. MSCI and FTSE Russell are two companies that have introduced momentum indexes. It is important to recognize that many traders view the RSI value of 50 to be a support and resistance benchmark.

There is no single momentum technical indicator that fits all occasions. That’s why it’s essential to know different indicators and how to use them in different trading strategies. Finding the best momentum stocks can sometimes pay off for nimble investors. Momentum bucks traditional investing principles, yet research supports its merit. Reversal trading is a strategy that involves identifying potential turning points in the market and entering trades in the opposite direction of the prevailing trend. This approach can be more challenging, requiring you to accurately predict when a trend is about to reverse.

Top Indicators and Tools for Momentum Trading Strategies

Since it emphasizes quarterly and annual earnings per share (EPS), some may argue it’s not a momentum strategy, per se. However, the system generally seeks stocks with both earnings and sales momentum and tends to point to stocks with price momentum, as well. It’s simple to use short-term and long-term moving averages to spot trending stocks. You can specify that your stock scanner screen for stocks where, for example, a 10-period moving average is above the 50-period moving average. Of course, to screen for downtrending stocks, you specify the shorter period moving average as below the longer-term MA.

Perfect for day traders and active investors who want to stay ahead of the trend and make money. With a momentum scanner you can filter through thousands of stocks in seconds and Stock Momentum find the ones that match your criteria, saving you time and improving your strategy. Overall, momentum indicators are powerful tools to help you make better trading decisions.

This can signify that the trend is losing momentum and may be due for a reversal. While there’s no way to time the market or know what stocks will gain momentum at any given time, there are some interesting opportunities for patient momentum stock investors. Keep reading to see five momentum stocks that have already delivered strong results for investors and could continue to outperform.

So, if you feel you have the skill of identifying momentums in trading, then go ahead and try it. So, this strategy involves entering trades after a price retracement in the direction of the primary trend. The idea is to catch the “pullback” in a trend before it resumes its main direction. From the chart above, we can see that the price is forming a higher high.

This is a signal of potential continued momentum in the trend’s direction. Mostly, traders utilize this tool for corroborating price movements rather than for direct trading signals. An upward crossing of the zero line by the indicator signifies increasing upward momentum in price, whereas a downward crossing indicates a growing downward momentum.

Just because a stock has recently outperformed the market doesn’t mean it will continue to do so. The first step to finding momentum stocks is to screen for companies that have recently outperformed the S&P 500 by a significant margin. Then, take a closer look at each stock to figure out why they have performed so well, and whether there’s still upside potential if the company continues to execute on its strategy. – If you hire a professional to do momentum investing/trading for you, they come with high fees as the stock turnover is also substantial. It works similarly to RSI – 14D except for the exponential average of price close of stocks for the previous 14 tradable days is used. An exponential moving average is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data.

Though «momentum» can refer to fundamental measures of performance, such as revenue and earnings, it is most commonly used in reference to historical asset prices as a technical indicator. Market sentiment is the overall attitude of investors toward a security. Market sentiment, which is often influenced by crowd psychology, influences market momentum. In individual securities, market momentum for a particular stock can be driven by several factors. Positive momentum can be the result of increasing revenue, earnings, or sales. Positive momentum can also be influenced by a reduction in a company’s debt obligations and an increase in its projected cash flow.

An asset falling in price may find support at the 50 value and bounce off this level again to continue an upward rise in price action. There are many charting software programs and investing websites that can measure momentum for a stock so that investors don’t have to calculate it anymore. However, it’s important to understand what goes into those calculations to better understand what variables are used in determining a stock’s momentum or trend. Like a boat trying to sail on the crests of waves, a momentum investor is always at risk of timing a buy incorrectly and ending up sunk. Most momentum investors accept this risk as the price for the possibility of higher returns. The same risk-return trade-off that exists with other investing strategies also plays a hand in momentum investing.

• Momentum investing is quite different from many of the strategies typically employed by long-term investors.
• Tampa’s usually busy commercial port was closed as of Wednesday morning.
• Momentum traders benefit from herd mentality, greed, and fear of missing out.
• The RSI is a popular momentum oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the stock market.
• In addition, some strategies involve both momentum factors and some fundamental factors.
• This can happen because of unexpected news or changes in investor sentiment in the market.
• Beyond that challenge of identifying stocks with a difficult-to-define «it» factor, it is also important to understand that momentum cuts both ways.

«With nearly half of 2025 booked and less inventory remaining for sale than the prior year, we are leveraging strong demand to achieve record ticket pricing,» Weinstein said in the release. «Likewise, 2026 is off to an unprecedented start achieving record booking volumes in the last three months.» The firm also expects Royal Caribbean to announce a long-term plan within the next two quarters, likely in conjunction with its Q3 or Q4 report. Citi said it doesn’t see any reason that the cruise operator can’t achieve $20 per share in earnings.