The targets of investment are normally looked for in those shares that are closest to their 52-week highs. A stock screener is a useful device that lets investors sort stocks according to a determined set of criteria, like changes in price about their 52-week high. This strategy presupposes the presence of a favorable upward trend that may be maintained in the future of the planning horizon. Let me show you how you can easily pick out and grade such stocks to improve your portfolio.
Understanding 52-Week High Stocks
A stock with a 52-week high signifies that it has performed well in the recent period of a year as compared to the past periods. It can represent a positive market outlook, a good operating environment and good earnings results. While there are sometimes concerns when it’s deemed appropriate to buy shares at their current prices, there are other investors who see a stock trading at a particular price, appraised as being high, as an opportunity that is potentially profitable in the future.
Using Stock Screeners
The use of stock screeners is very important when it comes to screening 52 week high stocks. These tools help to use several parameters to select stocks based on the price changes in the year’s performance. You can use standard financial portals like Yahoo Finance, Google Finance, or a brokerage firm’s site, as they offer a convenient feature to sort the stocks in terms of how close they are to their 52-week highs.
Key Criteria to Consider
Bear this in mind when using a stock screener to find 52-week high stocks: more factors other than price should be taken into consideration. Check the volumes of the stocks that are being traded and other fundamentals, such as EPS and P/E ratios. The other factor is in analyzing the current news and events that may be prevalent in the stock. These factors give a better picture of how a stock would perform than the fairly average relative strength line.
Technical Analysis
More so, certain technical inputs like the moving averages and the relative strength index or RSI, are useful. For instance, a stock price at or close to its 52-week high with good technical signals will have a lot of support for the trading strategy.
Risk Management
Stocks that are close to their 52-week high have similar risks, such as the possibility of a pullback or a fluctuating stock market. To avoid such risks, contain them through measures such as entering stop-loss orders or diversifying the holdings.
Conclusion
Picking stocks that are close based on 52-week highs can be a rather effective approach to developing the type of momentum and growth most investors look for in the secular arena. To know more about the strategies and other important details about the stock market, please refer to 5paisa. Currently, the stock market is surrounded by some unique challenges and 5paisa has all the tools and documentation that a trader interested in stocks would require for a smart trading experience.
