This kind of outperformance can be driven by any number of factors, but there's no doubt that strong near term moves appeal to momentum traders in search of recoveries and breakouts. While market sentiment has generally been bullish in recent months, there are still big concerns about the earnings outlook for many companies in the months ahead.
Trading the trend
Research by some of the investment industry's most respected strategists shows that relative strength can be one of the most consistently useful pointers to growth.
Price momentum is heavily influenced by psychology, with investors under-reacting and subsequently over-reacting to company news, driving prices higher over time.
The catch is that investor sentiment is prone to wild swings, which makes momentum risky when used on its own. Combining it with other factors, like attractive valuation, high quality and low volatility, can help reduce that risk.
Overall, the upward trend in the share price of Maxcyte Inc over the past three months is a promising sign. But while the stock has been outperforming recently, relying on momentum in volatile markets can be hazardous.
What does this mean for potential investors?
Shares in Maxcyte Inc have outperformed the market over the past three months - but momentum on its own is no guarantee of future returns.
To get a better idea about whether this trend will continue, it's worth doing some investigation yourself. Indeed, we've identified some areas of concern with Maxcyte Inc that you can find out about here.
Alternatively, if you'd like to find more shares with strong price momentum, you can find them on this Outperforming the Market screen.