The idea of buying based on price strength and selling based on price weakness is at the core of momentum investing. Apart from several momentum indicators that can be used to identify momentum stocks, one of the best ways to gauge the momentum in stocks and in the broader markets is to check the 52-week high levels across the market. Any stock touching its 52-week high is an indication of the underlying bullishness in the stock. The 52-week highs reflect the price strength that any momentum investor may be looking for.
Market Indicators
If we consider stocks that are hitting their 52-week highs in July, we find that almost 351 stocks on the BSE touched their respective 52-week highs that saw the Sensex gain 5 per cent in the first 10 days of July. In the pre-pandemic period or the month just before the lockdown i.e. February, almost 380 stocks touched their respective 52-week highs while January saw 438 stocks listed on the BSE hit their respective 52-week highs. The lockdown period of April saw 77 stocks, May saw 62 stocks and June saw 280 stocks touching their respective 52-week highs.
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