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Finding #1 Stocks: Screening, Backtesting and Time-Proven Strategies by Kevin Matras

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Chapter 7

Winning Momentum Strategies

Let’s take a look at some winning Momentum style stock screens and trading strategies and dig deeper into what this style is all about. Even if you’ve identified yourself as something other than a Momentum trader, be sure to check out the screens that follow anyway. Remember, most people do not fit squarely into one style; that’s the idea behind the “All Style” style. And you’re likely to pick up some good ideas in this chapter.

Once again, the Momentum style focuses on price momentum or earnings momentum or both. In this chapter we highlight five strategies that cover all aspects of the Momentum style including how to apply these methods for Sector and Industry analysis.

Big Money

Let’s start off with one of my personal all-time favorite screening strategies. This screen is called Big Money. Actually I have several variations of this, but the one I use the most is called Big Money Zacks (it’s the Big Money screen with the Zacks Rank added to it).

This is a straight-up price momentum screen. But it has a great value twist added to it as well. First let’s take a look at the parameters. Then we’ll take a look at the methodology.

Parameters

The screen starts off with the following items:

  • Zacks Rank <= 3
  • Average Broker Rating < 2
  • Price to Sales Ratio < .5
  • Average 20-Day Volume >= 50,000

From there it adds:

  • Percent Change in Price over 24 Weeks Top # 20
  • Percent Change in Price over 12 Weeks Top # 10
  • Percent Change in Price over 4 Weeks Top # ...

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