3 Momentum Anomaly Stocks to Buy as Tech Rout Spooks Markets

Market Overview - The U.S. equity markets have experienced a downtrend over the past three trading days, with intensified sell-offs in the technology sector as investors shift focus away from riskier bets due to fears of AI disruption [1] - A significant decline in the cryptocurrency market, particularly Bitcoin dropping below $70,000 to a low of $60,062, has contributed to the negative sentiment [1][2] Labor Market Concerns - Weakness in the labor market has added to the downbeat sentiment, highlighted by the ADP report showing fewer-than-expected job additions in January [2] Momentum Investing Strategy - Momentum investing is characterized by the strategy of "buying high and selling higher," based on the belief that stocks with established trends are likely to continue in that direction [3] - This strategy aims to capitalize on the human tendency to project current trends into the future before mean reversion occurs [3] Screening Parameters for Momentum Stocks - The screening process identifies the top 50 stocks with the best percentage price change over the last 52 weeks, ensuring selection of stocks that have appreciated steadily [5] - From these, the bottom 10 performers over a one-week period are chosen to identify those experiencing short-term pullbacks [6] - Stocks with a Zacks Rank 1 (Strong Buy) and a Momentum Style Score of B or better are prioritized, indicating a higher probability of success [7] - Additional criteria include a current price greater than $5, being among the top 3000 in market capitalization, and an average 20-day trading volume exceeding 100,000 [8] Selected Momentum Stocks - Micron Technology has seen a 305% increase over the past year but experienced a 12.1% decline in the past week, holding a Momentum Score of B [11] - Lam Research has surged 157.5% in the past year but lost 14.1% in the past week, with a Momentum Score of A [12] - KLA Corporation has increased by 74.7% over the past year but faced a 21% decline in the past week, also holding a Momentum Score of A [13]