Momentum Madness and Nasdaq 100 Stocks | chart of art

Stocks have been on a downward trend for the past seven weeks, with Nasdaq 100 stocks leading the way. The S&P MidCap 400 SPDR (MDY) and Russell 2000 ETF (IWM) have gained more than QQQ over the past seven weeks, but QQQ is still the only major index ETF to surpass its 2021 highs and hit all-time highs. Chartists looking for momentum leaders should still focus on the Nasdaq 100.

The chart above shows QQQ with two major uptrends (green arrows) and IWM with two trading ranges (blue arrows). IWM looks set to break out of its 18-month trading range, but is still well below its November 2021 highs. Simply put, QQQ is much more “trending” than IWM and I will continue to use QQQ.

Choosing a focus index is important in momentum strategies. I tested many strategies using large-cap, mid-cap, small-cap, and Nasdaq 100 stocks. S&P 500 and Nasdaq 100 stocks performed well on a risk-adjusted basis as small-cap and mid-cap strategies resulted in excessive drawdowns. Small caps aren’t worth the hassle, IMHO.

TrendInvestorPro implements a momentum rotation strategy trading stocks of the S&P 500 and Nasdaq 100. These strategies use trend indicators to find upward trends and rank indicators to identify leaders. The idea is to buy the top 10 and sell when they fall outside the top 20. This week’s leaders include META, NVDA, CRWD, ADBE, MSFT, and AVGO. See the CandleGlance chart above.

To learn more about momentum rotation strategies and performance indicators, check out TrendInvestorPro. We also have a chart trading strategy that includes setups every Tuesday and Thursday. Click here for immediate access.

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