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TheStreet Open House

Tesla Led 8 Momentum Stocks Higher in 2013

NEW YORK (TheStreet) -- The usual characteristics of momentum stocks include banking huge gains over the last 12 months, being significantly overvalued and having elevated price-to-earnings ratios. During a momentum phase, these stocks will typically have positive but overbought weekly chart profiles, with weekly closes above their five-week modified moving averages. At times these stocks can be out of favor and have significant downside corrections until momentum characteristics return.

As I explained on New Year's Eve, Apple (AAPL) shifted from being a momentum stock in 2012 to a value stock on weakness into April 2013. It then returned to momentum status in the second half of 2013.

Despite showing recent downside volatility, Tesla Motors (TSLA) and Netflix (NFLX) were the best performers in 2013, with gains of 344.1% and 297.8%, respectively.

As 2014 begins, there appears to be some profit-taking among the 8 momentum stocks I have been following.

Here are my buy-and-trade parameters for these stocks.

Apple ($553.13) ended 2013 at $561.02 with a hold rating, overvalued by 18.2% and with a gain of 5.4% in 2013 and a P/E ratio of 14.1. The stock is below its 21-day simple moving average (SMA) at $559.74 with its 50-day and 200-day SMAs at $539.90 and $474.36. Apple has a positive but overbought weekly chart profile, maintaining momentum characteristics. The stock is above its five-week modified moving average (MMA) at $543.23 and its 200-week SMA at $427.32. My new annual value level is $517.05, with a monthly pivot at $549.13 and an annual risky level at $586.06. Compare this to the recent high of $575.14, set on Dec. 6. My new semiannual risky levels are at $657.40 and $666.94.

Amazon.com (AMZN) ($397.97) ended 2013 at $398.79 with a hold rating, overvalued by 79.8% and with a gain of 59% in 2013 and a P/E ratio of 650.2. The stock set an all-time intraday high at $405.63 on Dec. 27 and is above its 21-day, 50-day and 200-day SMAs at $391.77, $374.34 and $306.79. Amazon has a positive but overbought weekly chart profile, maintaining momentum characteristics above its five-week MMA at $382.47 and its 200-week SMA at $219.17. My semiannual and annual values are $359.11, $351.24 and $334.95, with a quarterly pivot at $402.56 and monthly risky level at $412.18.

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