<<What do you define as a Momentum High>>
Gtober, If you look at a chart of most any stock that is rallying, you"ll see a momentum peak (essentially a Price and Volume peak) that precedes the actual price high, generally by two to four weeks (I use three weeks as a guide).
If you'll notice JNJ on 4/15, had a high of $54.77 on 1,934,680 shares, followed by three days of lower highs, and much less volume, before it started rising gain. I call this the Momentum Peak.
On MRK, on 4/15 on 1,262,000 shares it reached $47.15, but then followed on 4/16, with a slightly higher high of $47.38, then MRK fell off for a few days, on much lower voulme, before resuming it's climb. Again a Momentum Peak.
Not every stock has a visible Momentum Peak, on every cycle, it is there but it just isn't readily seen, so I have to check the daily volume, to try to locate it, once I do, then I just expect a cycle top, will be coming in the not too distant future.
Sometimes you can see the same thing on a low, in the case on JNJ, it had a Momentum Low on 12/2/03 (at $48.93) and a price low a few days later on 12/12/03 (at $48.79) THEN AGAIN on 3/18/04, a Momentum Low (at $50.29) and a price low, a few days later, on 3/22 (at $49.25). In the case of the lows, there is usually less separation (of time) between the Momentum Low and the Price Low.
I try to buy these price lows (I am not worried about trying to hit the exact penny, since I've never hit one yet), but as soon as the stock breaks under the low price (of the Momentum Low) then I buy. If I am a day or so early, then so be it, at least I have purchased the stock, at a good price.
Jim
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