Knowing when to exit a position is one of the hardest things for investors. Loss aversion causes people to sell too soon to protect gains when really they should be running winners. Our sector writers can't be accused of this bias with the top three companies in this week's FTSE All Share momentum screen; however, all three are now on hold rather than being rated as buys. This seems sensible as, while selling against the momentum implied by our screen may leave profits on the table, there are underlying fundamental reasons why investors might wish to wait for more favourable entry points.
- There are reasons to question whether now is time to buy any of the three FTSE All Share companies that pass 8/8 tests on our share price and earnings momentum screen. In the case of AVEVA (AVV), which is a holding company for engineering testing software, will core markets such as oil & gas companies maintain levels of demand for its services?
- Likewise, mining giant BHP Group (BHP), which also scores 8/8, is vulnerable to a softening in commodity prices if the global economy stutters further.
- Software provider Kainos (KNOS) has also been on a tear but Investors Chronicle recently moved it to ‘hold’ pending a more attractive entry point.
- On Aim, companies that catch a wave of sentiment often maintain impressive momentum for months. One of the top rankers in this month’s screen is Simon Thompson Alpha tip, Elektron Technology (EKT).
