Risk
7 momentum stock traps
Each one looks like strength. Each one has a checklist question that catches it.
Every trap here scores well on at least three of the five traits. That is what makes them traps.
1 · The extended chase
Everything is true — relative strength, trend, volume, catalyst — but the stock is 25% above its 20-day average. The setup is real; the entry is late. Caught by: is it too extended?
2 · The volumeless breakout
A clean push through resistance on below-average volume. Nobody defended the level because nobody was there. Caught by: is volume confirming?
3 · The lone gunman
A strong breakout in a sector that is bleeding. Sometimes it is a genuine idiosyncratic winner. More often the group drags it back. Caught by: is its sector strong?
4 · The earnings gap fade
A large gap up on results, then a full-day fade on heavy volume. The catalyst was real and the reaction was distribution. Caught by: did up-day volume beat down-day volume?
5 · The thin float squeeze
Enormous relative volume, spectacular one-week performance, tiny float. It moves 15% on your own order. Caught by: is dollar volume sufficient?
6 · The wide-ATR stop trap
The setup is fine but the ATR is so large that a logical stop is 18% away. Sized correctly, the position is too small to matter. Sized normally, it is far more risk than intended. Caught by: can risk be defined?
7 · The strong stock in a weak tape
The single most expensive trap, because it looks like discipline. The name genuinely is the strongest thing available — in a market where breakouts are failing broadly. Caught by: does the market environment support momentum?
The pattern
Six of the seven are caught by the risk section of the score, which is why it carries 20 points rather than 5. The traits that make a stock attractive and the traits that make it tradable are different traits.