Proper Momentum Gap Setups (MGS) occur in quality growth names. Quality is measured by daily volume, price and sales/earnings. We also have to insist on a disruptive/innovative nature of the company at hand (compare with the ‘N’ in CANSLIM). While it is impossible to screen for the latter, one can easily screen in a way to ensure basic quality. I do insist on positive annual forward earnings and quarter of quarter sales growth >10%. Recall that the MGS is the go to setup to ignite multiyear rallies, e.g., $SNAP $FB $TTD $TSLA $SE. Such names already possess great numbers before any momentum gap on earnings.
Here is my quality momentum gap setting for the Finviz Screener:
Here are two example MGS which show that the best ones come from an already extended position which helps to increase the ‘scare level’. This prevents traders from buying before earnings, because weak traders love to wait for the pullback. The strongest MGS’s are therefore of a runaway nature coming from a steady rally without any pullback at all.
This is a rather narrow screen. It could be that some numbers can’t be copied if you only use the free Version of finviz. Finviz Elite allows to use custom ranges and numbers. If you are not on ‘Elite’ you can simply change the numbers slightly, e.g., 200M min market cap instead of 220M. It actually makes no real difference.
It is prudent to also run a basic screen to find all the names which are up in pre market trading. In rare cases a stock is slightly below the 50d MA or the 20d MA is slightly below the 50d MA. In both occasions the above screen would filter them out.
Refer to the following basic ‘up in premarket’ screen. It will do the job.