From Yahoo Finance · · 1m 30s
When uptrends meet bullish sentiment, stocks win bigger
A data-driven study shows that stocks in strong uptrends with analyst buy ratings outperform the market over the next month.
In brief
A data-driven study shows that stocks in strong uptrends with analyst buy ratings outperform the market over the next month. Uptrending stocks don't win more often, but when they do win, they win significantly larger than other stocks, especially when analysts are bullish. Originally reported by Yahoo Finance.
Building a trend ranking system
Using moving averages across different time frames, the author created a ranking system to identify stocks in the strongest and weakest uptrends over the past three months.
Uptrending stocks outperform by 31 basis points
From 2024 onward, the 30 stocks in strongest uptrends averaged 2.15% returns over the next month, beating downtrending stocks at 1.57% and the broader market at 1.84%.
Winners win bigger, not more often
Uptrending stocks weren't more likely to be positive or beat the S&P 500, but when they won, they averaged 12% gains versus 11% for other stocks.
“The top-trending stocks did not necessarily win more often; they tended to win bigger when they did.”
Analyst bullishness strengthens the signal
Uptrending stocks where at least 80% of analysts rated them a buy averaged 2.61% returns, versus 1.72% for stocks analysts were bearish on.
Bullish consensus beats the market
Uptrending stocks with 80% analyst buy ratings had a 57% positive return rate and 50% beat the S&P 500, outperforming other groups.
The winning formula for short-term trades
Stocks ranking in the top 30 strongest uptrends with at least 80% analyst buy recommendations offer a strong starting point for traders seeking one-month gains.
Here's the gist
Uptrending stocks don't win more often, but when they do win, they win significantly larger than other stocks, especially when analysts are bullish.
