Momentum investors look for stocks that are increasing in value and predict whether the trend is likely to continue. If they believe that it will, the investor may buy the stock and take profits after they increase in value quickly.

Similarly, momentum traders could buy into stocks that have been oversold, in other words where the share price has declined rapidly within a short period of time.

Obviously there’s a bit of risk involved in momentum trading because in essence, you’re making a decision to buy a stock based on recent activities of other traders.

So to be a successful momentum trader, one needs to be able to identify the best stocks quickly and accurately.

The goal for momentum traders is basically to enter into trades at key points in the trend in order to maximise profits.

There are several indicators to quantify momentum, and here we look at three main signals used by the market:

  • 52-week high
  • Simple Moving Average
  • Relative Strength Index


10 ASX small caps nearest or at 52-week highs

Traders often view the 52-week highs as entry signals.

This is due what’s called the “52-week high effect” – where if  a price has broken out above its 52-week range, there must be some factor that generated enough momentum to further continue the price movement in the same direction.

On the other hand, if a stock is far away from its 52-week high, chartists believe the momentum will continue going that way.


10 ASX small caps at 52-week high

(data from Commsec)

Code Name Price How far from 52-Week High? 1 mth return 6 mth return 12 mth return
ATP Atlas Pearls $0.19 0.00% 103.30% 340.48% 611.54%
CAA Capral Limited $9.55 0.00% 9.77% 36.23% 30.64%
CVN Carnarvon Energy $0.23 0.00% 39.39% 76.92% 53.33%
AAP Australian Agricultural Projects $0.02 0.00% 5.00% -- 5.00%
ABV Advanced Braking Tech $0.05 0.00% 8.33% 36.84% 30.00%
SKS SKS Tech $0.30 0.00% 25.00% 100.00% 71.43%
AHC Austco Healthcare $0.20 0.00% 5.26% 17.65% 81.82%
TCG Turaco Gold $0.14 0.00% 12.50% 181.25% 132.76%
CAF Centrepoint Alliance $0.32 0.00% 10.53% 40.00% 50.00%
3PL 3P Learning $1.40 0.00% 20.17% 27.27% 7.69%
Wordpress Table Plugin


Atlas Pearls (ASX:ATP)

Atlas has been rising releasing its releasing its recently completed auction in Kobe, Japan.

The company said it sold 130,000 loose pearls for total revenue of $14.81 million in Kobe. The Kobe auction was the last sales event for 2023, with further sales events planned for the 6 months ending 30 June 2024.

The quality of pearls offered in the latest auction was better than earlier sales in the year, and some quality improvements have been noted in recent harvests.

The quality index, which the company uses to compare one harvest against the next, sVll remains well below long term averages.


Austco Healthcare (ASX:AHC)

Last week, the healthcare solutions provider said that its subsidiary, Teknocorp, has been awarded a $1.2 million contract to deliver access control and CCTV solutions for the upcoming Whittlesea Community Hospital in Victoria.

Austco says this contract win demonstrates the benefits of collaboration resulting from the Austco/Teknocorp merger, and underscores the strategic significance of the Teknocorp acquisition in strengthening Austco Healthcare’s capabilities and extending its presence in the healthcare sector.

Meanwhile, the Whittlesea Community Hospital provides community health including chronic disease management, chemotherapy, social support, and women’s health.


10 ASX small caps with prices above SMA

Simple Moving Averages (or SMA) is another indicator that can be used to gauge momentum.

SMA is often used to determine whether a stock price will continue in the same direction, or if it will reverse a bull or bear trend.

As a general rule, if the current stock price is above the SMA, the price trend is up. If the price is below the SMA, the trend is down.

10 ASX small caps at prices above SMA

(data from Commsec)

Code Name Last Price Value Price vs. Simple Moving Average Price vs. 20 day SMA Price vs. 50 day SMA Price vs. 200 day SMA
BTR Brightstar Resources $0.02 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA
ADA Adacel Technologies $0.87 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA
ADN Andromeda Metals $0.03 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA
AEI Aeris Environmental $0.04 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA
CT1 Constellation Technologies $0.00 >5% Above SMA 1 to 5% Above SMA 1 to 5% Above SMA < -5% Below SMA
AJL AJ Lucas Group $0.01 >5% Above SMA 1 to 5% Above SMA 0 to 1% Above SMA < -5% Below SMA
CYM Cyprium Metals $0.03 >5% Above SMA >5% Above SMA >5% Above SMA < -5% Below SMA
ASB Austal $2.03 >5% Above SMA 1 to 5% Above SMA >5% Above SMA 1 to 5% Above SMA
FFG Fatfish Group $0.02 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA
ATP Atlas Pearls $0.19 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA
Wordpress Table Plugin


Andromeda Metals (ASX:ADN)

Thor Energy (ASX:THR) has welcomed a strategic investment by Alligator Energy (ASX:AGE) into EnviroCopper (ECL, which THR holds 30% of) to further develop In- Situ Recovery (ISR) copper projects. ECL also signed a deal with Andromeda Metals to acquire the Alford West ISR joint venture in South Australia.

At the same time, Andormeda announced that it has entered into a Sale and Purchase Agreement via its wholly owned subsidiary Peninsula Resources, for exploration licence EL5984 (related to the Moonta Copper Gold Project) with EnviroCopper and its wholly owned subsidiary Environmental Metals Recovery.

Under the Agreement, Andromeda will sell its interests in EL5984 to EMR, including: 100% of its interest in the Alford Project Area; 100% of its interest in the Moonta Project Area, excluding the Moonta Porphyry Project Area; its 90% interest in the Moonta Porphyry Project Area; and all information, rights and obligations held by Peninsula, related to the above.


AJ Lucas (ASX:AJL)

The drilling services provider to the Australian coal industry rose after announcing the appointment of Greg Runge as CEO of its Australian Operations effective 1 January 2024.

This appointment follows a thorough search and evaluation process of internal and external candidates, in consultation with an external executive search firm.

Runge has been working for the Group for over 17 years, and more recently headed up the Groups’ Directional Drilling operations. Prior to joining AJL he had a long career in the Oil and Gas industry.


10 ASX small caps with low RSI (Oversold)

Here’s another momentum signal used by the market – the Relative Strength Index (RSI).

RSI is a measure of the strength of a stock’s momentum, either in the upward or the downward direction, and is used to indicate whether a stock is oversold or undersold.

Generally speaking, an RSI above 70 means a stock is overbought; and an RSI below 30 indicates that it’s oversold.

An RSI above 80 meanwhile is strongly overbought, and an RSI below 20 is strongly oversold.

10 ASX small caps at prices with RSI Oversold signal

(data from Commsec)

Code Name 2 Day RSI 9 Day RSI 14 Day RSI
BKY Berkeley Energia -- Oversold --
1AI Algorae Pharma -- Oversold --
SNT Syntara -- Oversold Oversold
HCD Hydrocarbon Dynamics -- Oversold --
CI1 Credit Intelligence -- Oversold --
SAN Sagalio Energy -- Oversold --
IVZ Invictus Energy -- Oversold --
INP IncentiaPay -- Oversold --
SHM Shriro Holdings -- Oversold --
VBS Vectus Biosystems -- Oversold --
Wordpress Table Plugin


Syntara (ASX:SNT)

Syntara has been falling since announcing firm commitments to raise approximately $10 million via a two-tranche placement at $0.022 per share.

The company will also offer a Share Purchase Plan (SPP) of approximately $2m which for its retail shareholders.

Funds raised will be used towards completion of three Phase 2 clinical trials in myelofibrosis, scarring and iRBD/Parkinson’s disease, as well as for general working capital purposes and capital raising costs.


IncentiaPay (ASX:INP)

The digital payments and rewards company has agreed to major amendments to its Convertible Loan Deed with New Gold Coast Holdings (NGCH).

IncentiaPay and NGCH have agreed to amend the Convertible Loan Deed to provide: a) deferment in the principal repayment date from 31 Dec 2024 to 31 Dec 2025; and b) deferment of interest payments from 31 Dec 2024 to 31 Dec 2025.

Further, no interest will be charged on the interest accrued; and deferred interest will not be eligible for conversion to equity.