LOQ: momentum thoughts

I had been writing recently about a momentum strategy that I’m trying to develop. I am looking for RS6m in the top quintile, and PV50 (price vs 50dSMA) less than, say, 7.5% for a buy.

On the face of it, Lo-Q (LON:LOQ) appears to meet that criteria, with RS6m of 41%, and PV50 -7%.

It released bullish interims today, announcing “Good sales momentum across all Lo-Q product lines at both new and existing customers”.

However, the price fell 5%. It is trading on a PER of 35. I take that as a sign that momentum has now actually broken down, irrespective of it being a “buy” as a mechanical entry point. I used to hold LOQ, but sold out in Feb at 404p. So I left plenty of money on the table, unfortunately. Given the bad reaction to the good interims, it appears that the market is now aware that the stock is overvalued, and should be considered a sell.

Just my opinion, of course. We shall see.