Alpesh's Bearish Short-Term Momentum Filter
Medium-high risk - 1-3 month typical holding period - target 20% return
This filter picks out stocks that have shown recent downward price momentum. These stocks are different because we are looking to "short" them either using Contracts for Difference (CFDs) or by spreadbetting. We are hoping to jump onto the avalanche and hop off near the bottom.
The criteria I have chosen identify stocks that have been declining in price but which are also somewhat overvalued.
This filter should be used when the market is bearish. This filter looks for stocks that have just started to fall in price. I use the Momentum Radar to help me decide if these stocks are likely to fall much further.
My aim is to find stocks that will underperform the market.
These stocks are higher risk and I always check the news looking for something negative which might explain the fall. I tend to exit half or all of my position if the price makes a two or three day high.
These moves could take several days to several months. Note, however, that these stocks may have already made their move. How do we try to determine this?
Let's look at some examples:
Example A: smooth fall, indicators all falling.
Example B: Caution
Stock may have made its move as it has bounced off recent support. Trade if breaks below 550 level.
Again, may have made its move as MACD fallen already quite sharply.
