Be careful of your entry points for momentum stocks. As of late, there are talking heads on TV that recommend buying momentum stocks into the year-end rally because this is what has been working. But that seems to be a poor strategy. Two momentum stocks that have been discussed are Amazon
(NASDAQ:AMZN) and Google
(NASDAQ:GOOG). Amazon was overbought as of Thursday and is now Neutral on our counter trend reading, and we have a strong buy on the name. As for Google, the name is still overbought; however, it is rated a Strong Buy. As you can see in the first chart, Google is down $30 since going to an overbought level. At this juncture, we would wait for a Neutral reading before getting long the name. The bottom line: Stay objective and don’t just blindly jump into overbought names.
Ratings are as follows: 1 Strong Sell, 2 Sell, 3 Hold, 4 Buy, and 5 Strong Buy.
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