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Despite general economic uncertainty, shares in Fufeng (HKG:546) have been in an uptrend in recent months. The question now for investors is whether that price strength will continue.
Finding stocks with the potential to break-out as their popularity grows is a strategy used by some of the world’s most successful traders.
Knowing what drives relative strength in share prices can help you find profitable momentum trades...
How has the Fufeng (HKG:546) share price performed?
In terms of relative price strength the stock has performed well against the market over the past year:
1 Month: 43.3%
6 Months: 114.2%
12 Months: 171.1%
Relative strength is a useful tool in the armoury of technical traders and investors. It’s an instant measure of how a stock has performed in comparison with a benchmark.
And while there are no certainties about which way a stock will move next, research shows that price trends like this often persist.
Studies by leading experts on momentum show that stocks with the strongest price strength tend to keep up the pace for anywhere up to one year, as investors increasingly buy into them.
What does this mean for potential investors?
Fufeng is currently among the stocks with the strongest six-month and one-year relative price strength in the market. But momentum on its own is no guarantee of future returns.
To get a better idea about whether this momentum will continue, it's worth doing some investigation yourself. Indeed, we've identified some areas of concern with Fufeng that you can find out about here.