One of the themes for 2013 has been the rocket ships that are ‘momentum stocks’. So far this year Netflix ($NFLX) is up 280%, Tesla ($TSLA) is up 416%, Zillow ($Z) is up 200%, and Yelp ($YELP) is up 284%, just to name a few. If you look at each of these stock’s charts you’ll see continued breaks of momentum into ‘overbought’ status – and this isn’t necessarily a bad thing.
This is the topic of my TraderPlanet article for this week.
Here’s a piece:
For many novice traders who begin showing interest in technical analysis they read a lot about oversold and overbought markets. The money signs flash in their eyes at the thought of how simple trading must be as they start penning a letter to Buffet that he should prepare to relinquish his seat to them on the Fortune Magazine’s Billionaire List. Not so fast!
Read the rest: Don’t Judge an Overbought Stock (TraderPlanet)
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.
