Screen for Trends - How to Identify a Surge in Momentum
A surge in momentum frequently occurs after a breakout: something has changed, news that has caused investors to abandon caution and chase the stock price higher. There are three stock screen filters that we can use to identify this:
- Directional Movement: DI Difference
- RSI Crossovers
- Twiggs Momentum
Momentum Screen Filters
Our focus is on long-term up-trends, that are expected to run for at least six months. We therefore use momentum filters with a time period of 13 weeks (half of the six month period).
DI Difference
Calculates the difference between current DI+ and DI- values.
![Screen for Directional Movement Index. Example filter settings: DI Difference (DI+ less DI-) no less than 20](/images/stock_screen_images/screen-filter-example-directional-movement-di-difference-20230619.png)
Try the following values:
- A Minimum of 20 or 25 for the S&P 500 or ASX 200
- A higher Minimum of 30 or 40 for faster-moving small caps in the Russell 3000 or ASX.
RSI Crossovers
Look for RSI Crossovers above 70 in recent weeks.
![Screen for Relative Strength Index Crossover. Example filter settings: RSI crossed above 70 percentile](/images/stock_screen_images/screen-filter-example-rsi-crossover-of-percentile-20230619.png)
Twiggs Momentum
Look for Twiggs Momentum with a Minimum value of 50.
![Screen for Twiggs Momentum Oscillator. Example filter settings: TMO value no less than 50](/images/stock_screen_images/screen-filter-example-twiggs-momentum-oscillator-20230619.png)
Example Screen Results
The results of our screen run on the S&P 500, Russell 3000, and ASX stocks are shown below.
S&P 500
If we combine all three filters, we get the following results for the S&P 500.
RSI (13week,Wilder,70) values reflect the number of consecutive weeks above 70.
![S&P 500 Screen for Momentum Step 1](/images/stock_screen_images/screen-s&p500-for-rsi-momentum-and-di-difference-20230619.png)
![Nvidia (NVDA) with Relative Strength Index RSI](/images/2023/2023-06-12-spx-nvda-w.png)
Russell 3000
We ran a higher Minimum of 40 (on DI Difference) for the Russell 3000 to reduce the number of stocks returned:
![Russell 3000 Screen for Momentum Step 1](/images/stock_screen_images/screen-russell3000-for-rsi-momentum-and-di-difference-20230619.png)
![Immunogen (IMGN) with Relative Strength Index RSI](/images/2023/2023-06-12-russell-imgn-w.png)
ASX
We had to go outside the All Ordinaries to find fast-trending stocks on the ASX:
![ASX Screen for Momentum Step 1](/images/stock_screen_images/screen-asx-for-rsi-momentum-and-di-difference-20230619.png)
![Voltaic Strategic Resources (VSR) with Relative Strength Index RSI](/images/2023/2023-06-12-asx-vsr-w.png)
Conclusion
We use three filters to find a surge in momentum:
- Directional Movement: DI Difference
- RSI Crossovers
- Twiggs Momentum
Adjust the minimum value for DI Difference depending on whether large or small cap stocks:
- At least 20 for the S&P 500 or ASX 200
- At least 30 for the broader Russell 3000 or ASX
Disclaimer
Please note that stocks shown are for illustration purposes only and are not recommendations. Readers should conduct their own research.
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