EarningsBeats Digest

Published: Mon, 12/20/21

EarningsBeats.com Digest for December 20, 2021

Slowing Momentum Is A Trader's Warning Sign

I'm often asked, "when do I sell?" Well, that depends on a lot of factors, but any time signs of slowing momentum appear, a trader should take notice. Remember, there's nothing wrong with selling a stock and looking to buy cheaper. If the stock continues advancing, there are plenty of other "fish in the sea." As I look at Alpha and Omega Semiconductor (AOSL), I see a stock being accumulated, but also one that could probably use a short pause:

Volume here has been solid throughout the current rally and the AD line is strong as well. So I would have no problem re-entering this stock on a 50-day SMA test as its PPO moves back toward centerline support (pink arrows). However, any time a stock like AOSL prints a higher price with a lower PPO, the risk of holding increases - in my opinion. A PPO move back to centerline support represents a "reset" where momentum can get started to the upside all over again. AOSL could simply continue to charge higher from here. I just believe the risks of holding right now might outweigh the possibility of that higher move.

Happy Trading!

Tom Bowley
Chief Market Strategist

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