It might be a bit soon to say the market is properly recovering from last year’s sharp slide, but some stocks have rebounded strongly in 2019. And for others, the correction last year hardly dented their price momentum at all.
In these kinds of choppy conditions, one screening strategy that offers an interesting perspective on the market is the 52 Week Highs list. After a spell of downward pressure, it acts like gauge of shares that are bouncing back fastest.
Most investors take a passing interest in the stocks that are hitting new highs. It’s the kind of data that can be found in newspapers and on financial websites everywhere. But what makes the 52 week high such an interesting datapoint is the psychology behind it. A couple of decades of academic research has shown that ‘new highs’ can provoke all sorts of irrational behaviour in investors…
So whether you’re interested in price momentum and new highs or not, just knowing about this irrational behaviour might give you a more objective view about how the market reacts to 52 week highs – and how to profit from them.
What lies behind the 52-week high?
On its own, the 52 week high is a…
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