The Quick Sprints scenario identifies stocks with rapid momentum which have recently broken out of a trading pattern by rising above a previous resistance level.


A resistance level occurs when investors are no longer willing to purchase the stock above a certain price point. Often when this happens, there are more sellers than buyers, driving the stock price down.


The Quick Sprints scenario flags companies that have upward momentum and that cross a previous price barrier (resistance) level. Often, these stocks continue to rise until the next resistance level is reached.


Since the scenario is based solely on momentum and not fundamentals, it is not possible to predict where the stock price will end. Investors should use this scenario as a way to identify companies that have suddenly come under the attention of investors. This may lead to a discovery of a long-term purchase, if the reasons for investing in the company are sound. These reasons may include the financials of the company or the industry/sector it is in.


For traders just looking for a way to capitalize on the movements, the stock may be purchased and held for a short duration, such as the remainder of the day in which the alert was received, or 3 weeks, to capitalize on the positive sentiment.  


The best returns occur with a holding time of 10 trading days (or more for longer term holds), as shown in the scenario card. However, lock in gains when they occur. if the stock is up 10% in 5 days, there's no need to wait another 5 days. You won. Lock it in. Other events can impact stocks. Take the gains as they come.

But as mentioned, this scenario can also identify longer term winners if you find a stock with strong financials and are willing to hold it through the ups and downs..


One interesting way to play the setup, is by purchasing 100 shares of the company - provided the financials are sound and warrant investment - and selling covered calls to capitalize on the momentum while protecting downside moves as other traders take gains. The calls can be bought back at a reduced price for a profit, or be left until the expiration date of the calls where the stock will be called away (purchased from you). 



How to Analyze the Data in the Scenario


This scenario finds stocks on the move and while we never really know if the stock will move for days or weeks, you can see some of this in the data. In the Scenario's Table View, at the bottom, you can see the avg moves by day. So, it seems by looking at the data for all events that the best way to play this is a 3-day holding period per the fact the cumulative returns for the first 3 days are positive.


That's for ALL stocks. If we filter by just the P/E ratio and set that to High and Medium, our returns improve:


Note the Day 1 avg price move is now 4.35%, up from 1.92%, and the following day avg. price moves are also higher.

Herein lies the power of the data. We can use the filters to uncover patterns in the data very quickly, and we can then create an alert for just those settings. In this case, the filtered alert would produce 23 events like this per year. On a 3-day hold, the cumulative returns would max to be (4.35% +.61% + 1.47%) x 23 events = 147.89% if traded perfectly (i.e. sold right at the closing price on day 3). 


Join LevelFields now to be the first to know about events that affect stock prices and uncover unique investment opportunities. Choose from events, view price reactions, and set event alerts with our AI-powered platform. 


Don't miss out on daily opportunities from 6,300 companies monitored 24/7. Act on facts, not opinions, and let LevelFields help you become a better trader.