The share price is up by around 3.51% over the past week. On a one-month basis, the Sunndal Sparebank share price has risen by 7.27%. Will this continue however? We can briefly look at the psychology and research around 52-week highs.
Do prices tend to continue rising after a 52-week high is hit?
52 week highs are always good news. But, surprisingly, research shows investors become hesitant about bidding their high performing shares any higher – even with further positive earnings news.
Psychologists call this anchoring. As humans, we tend to take our time when it comes to changing our opinions in the face of new information - even when it's good news. We become 'anchored' to the new price and cannot easily fathom a reality in which it could get any better.
This emotional tug-of-war often ends with the ‘new high’ stock drifting higher in price over the coming weeks and months. The upward trend is called “post earnings announcement drift”. As the news sinks in, momentum takes over and the price moves higher and higher (as fear of missing out sets in).
A look at Sunndal Sparebank’s StockReport could offer more insight into what’s driving the momentum in its share price. Any sensible investor would want to see strong solid fundamentals to the stock, rather than relying on just a 52-week high to make a decision on it.
What does this mean for potential investors?
With Sunndal Sparebank trading close to a 52 week high, it’s possible that investors in the market are uncertain about where the price will move next. It's important to remember that 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 Sunndal Sparebank that you can find out about here.
Alternatively, if you'd like to find more shares that are trading close to new highs, you can find them on this 52 Week Highs screen.