All Financial Wisdom

Momentum Strategy: The 52-week High

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I came across a very interesting article today about Momentum Investing called, "The 52-Week High and Momentum Investing."  This article by Thomas J. George and Chuan-Yang Hwang details a momentum investing strategy with the principle that when a stock is near its 52-week high, it hesitates and then accelerates through the barrier.  They bring up that once information arrives, it days some time before investors feel comfortable to revise their standings with a particular company.

After reading some of this all I could think about is Netflix over the past couple of days.

Netflix (NFLX) 5-day chart.

Netflix (NFLX) 5-day chart.

Netflix (NFLX) has increased 32% just over the last couple of days.  This is incredible.  Just yesterday, they added another 4% to this gain, which wouldn't be a bad gain for anybody.  I will have to continue keeping an eye on this case study.

References:

George, Thomas J., and Chuan-Yang Hwang. "The 52-Week High and Momentum Investing." THE JOURNAL OF FINANCE The 52-Week High and Momentum Investing LIX.5 (2004): n. pag. Basehitinvesting.com. The Journal Of Finance. Web. <http://basehitinvesting.com/wp-content/uploads/2013/01/52-Week-High-and-Momentum-Investing.pdf>.

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