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After a strong run, what's next for investors in Permianville Royalty Trust?

If you've ever found yourself feeling increasingly drawn to a stock that's constantly rising in price, you are not alone...

Since the dawn of the stock market, speculators have been captured by the tendency of prices to 'trend'.

When prices move in one direction the allure of not missing out in an uptrend or of throwing in the towel in a downtrend is often too great to resist. As a result, prices can continue to trend beyond fair value in either direction.

With that in mind, shares in Permianville Royalty Trust (NYQ:PVL) have been in an uptrend in recent months, and the question now for investors is whether that price strength will continue.

Knowing what drives relative strength in share prices can help you find profitable momentum trades...

GET MORE DATA-DRIVEN INSIGHTS INTO NYQ:PVL »

How has the Permianville Royalty Trust (NYQ:PVL) share price performed?

In terms of relative price strength the stock has performed well against the market over the past year:

  • 1 Month: 70.3%

  • 6 Months: 219.2%

  • 12 Months: 245.5%

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 can potentially persist.

Studies by leading experts on momentum show that stocks with the strongest price strength can sometimes keep up the pace for anywhere up to one year as investors increasingly buy in to them.

What does this mean for potential investors?

Permianville Royalty Trust 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 Permianville Royalty Trust that you can find out about here.