Riding the Rally portfolio: initial review + 10 new stock selections
In September last year I launched an experimental new model (virtual) portfolio called Riding the Rally. At the time, it had been a fairly dull summer in the markets, with both small cap and mid-cap indices underperforming the all-conquering FTSE 100. I decided to try and find a way to identify stocks enjoying strong short-term momentum.
My aim was to focus on momentum and not worry too much about fundamentals or the longer-term story. To try and select a short list of stocks to consider, I created a screen using the following rules:
(You can see the screen here, together with current results.)
I decided on an initial holding period of six months, but adopted two simple rules to try and cap my losses if things started to go south in a big way for any individual stocks:
20% stop-loss
Sell on profit warning
Six months can be a long time in markets. It certainly feels like it at the moment.
After a promising surge into the new year, the portfolio’s performance fell off quite badly through February and early March:
The result is that the portfolio underperformed the market substantially during the six months to 4 March 2026. Both figures exclude costs and dividends:
FTSE All-Share index: +13.7%
Riding the Rally portfolio: +7.2%
Portfolio review: too many changes?
You can read more about the initial portfolio in my original article. But my decision to adopt stop-loss and profit warning sale rules meant that five of the 16 original stocks were sold during the initial six month period. In four cases, I replaced them with new stocks.
In a recent Daily Report, Mark commented that stop-loss rules can sometimes become guaranteed loss rules in volatile markets. I decided to test this theory against the trading activity in the Riding the Rally portfolio since September.
It turns out that if I’d kept hold of each of the stocks I sold, a surprise recovery from one company would have meant that the aggregate loss I suffered would have been smaller:
| Company | Sale Reason (Date) | Actual loss | Loss on continued hold |
|---|---|---|---|
Secure Trust Bank (LON:STB) | Profit warning (09-Oct-25) | -9% | +29% |
Works co uk (LON:WRKS) | 20% stop-loss rule (04-Nov-25) | -22% | -29% |
EKF Diagnostics Holdings (LON:EKF) | 20% stop-loss rule (26-Nov-25) | -23% | -18% |
Rank (LON:RNK) | 20% stop-loss rule following gaming tax changes in November’s Budget (02-Dec-25) | -23% | -32% |
Supreme (LON:SUP) | 20% stop-loss rule (24-Feb-26) | -24% | -24% |
| Average | -20% | -15% |
However, the picture is complicated by the fact that I replaced five of the six stocks that were sold:
Secure Trust was replaced with ASA International at 197.7p on 10/10/25.
Works.co.uk was replaced with Gear4Music at 294.4p on 26/11/25.
EKF Diagnostics Holdings was replaced with ECO Animal Health at 93.2p on 26/11/25.
Rank was replaced with CMC Markets at 295.5p on 30/12/25.
Supreme was not replaced post-sale.
To understand the overall impact of my premature sales I need to consider the performance of the replacement stocks:
ASA International: +7.2%
Gear4Music: -6.5%
ECO Animal Health: -3.5%
CMC Markets: +8.8%
Average: +6%
Overall, I think the effect of the changes was probably broadly neutral. I am not sure if this level of complexity is worthwhile, but I will persist with the same approach for a further six-month period before deciding on any changes.
Updating the portfolio for another 6 months
Back in September, the process I set out for updating the portfolio after six months was as follows:
Check each remaining stock to see if it still qualifies for the screen, if so continue holding.
Add in new stocks from the current screen results, following the process below.
Reviewing existing holdings
Only three of my original selections from September still qualify for the screen. In a slight modification from my original process, I will trim these back to the default position size and let them run for another six months – effectively as new positions.
The stocks being held over are:
Serabi Gold (LON:SRB) - with the gold price up by more than 40% in six months, I’m not surprised to see this popular gold producer is still scoring well. Whether that will be true in another six months – or whether my gains may evaporate – remains to be seen.
CMC Markets (LON:CMCX) - this financial trading platform is also one of Graham’s top stock ideas for 2026 and was also recently covered in a Stock Pitch by Mark. Volatile markets are generally positive for leveraged trading services, so I’m hopeful CMC’s recovery can continue this year.
Sylvania Platinum (LON:SLP) - a recent multibagger that’s benefiting from the doubling of platinum prices over the last year. This stock is also a holding in my SIF Folio (and personal portfolio).
The remaining 12 stocks in the portfolio no longer qualify for Riding the Rally screen, so their positions have been closed out with the following results:
| Company | Profit/loss* (04-09/25 - 09/03/26) |
|---|---|
Serica Energy (LON:SQZ) | +53.6% |
Distribution Finance Capital Holdings (LON:DFCH) | +30.2% |
ASA International (LON:ASAI) | +7.2% |
Virgin Wines UK (LON:VINO) | +6.3% |
Frontier Developments (LON:FDEV) | +2.3% |
Tribal (LON:TRB) | -2.1% |
ECO Animal Health (LON:EAH) | -3.5% |
Zotefoams (LON:ZTF) | -6.3% |
Gear4music (HOLDINGS) (LON:G4M) | -6.5% |
Quartix Technologies (LON:QTX) | -6.8% |
Staffline (LON:STAF) | -8.1% |
SDI (LON:SDI) | -17.2% |
Average: | +4.1% |
*excluding dividends and transaction costs
New portfolio
The final step of this review is to rebuild the portfolio using current selections from the screen results – which look as follows at the time of writing:
I’ve summarised each stage of the process below and included a link to the most recent DSMR commentary for each company where possible.
A fuller description of this process was included in my September piece.
1st pass - sort screen results by sector and take highest the stock with the highest MomentumRank from each sector:
Harbour Energy (LON:HBR) - Energy (22-Dec-25)
Fresnillo (LON:FRES) - Basic Materials
Watches of Switzerland (LON:WOSG) - Consumer Cyclicals (04-Feb-26)
Secure Trust Bank (LON:STB) (Financials) (05-Feb-26)
Integrated Diagnostics Holdings (LON:IDHC) (Healthcare) (20-Jun-25)
2nd pass - cycle through the sectors again, this time choosing the stock with the second-highest MomentumRank in each sector:
Sylvania Platinum (LON:SLP) (existing holding) - Basic Materials (24-Feb-26)
CMC Markets (LON:CMCX) (existing holding) - Financials (20-Nov-25)
3rd pass - take a third stock from sectors with at least three qualifying stocks. In this case, those sectors were Basic Materials, Energy and Industrials:
Serabi Gold (LON:SRB) (existing holding) - Basic Materials (03-Feb-26)
Capita (LON:CPI) - Industrials (12-Dec-25) Sold following profit warning on 10-Mar-26
Capita replaced with Savannah Energy (LON:SAVE) - Energy
10 new stocks plus three existing positions gives a total of 13. That’s slightly smaller than previously, but all that’s possible within the scope of the screen results.
Here’s a snapshot of the updated portfolio for the next six months:
Sanity check: reviewing the portfolio's factor scores
To finish off, I think it’s informative to take a look at the overall factor profile of the portfolio as a form of sanity check.
Ideally, I want to see a combination of good (Quality) and cheap (Value) stocks - all with strong (Momentum).
Gaining an immediate snapshot view of any portfolio is made much easier by the recently upgraded Analysis tab on the folios page:
The initial impression is positive, averaging each of the portfolio companies' StockRanks:
Of course, an average can sometimes mask less appealing outliers.
Switching to the scatter chart view below provides some reassurance on this account. All of the stocks are clustered to the right, where momentum is strongest. Many also score well for value, suggesting that the majority may be quite reasonably priced:
Switching to the Quality & Momentum view provides further encouragement. Virtually all the stocks fall within the top-right segment of the chart where both quality and momentum are rated as good:
Having set the scene, all that remains is for me to keep an eye on the portfolio over the next six months to see if my selections are able to outperform the wider UK market this time around. I’ll report back here in due course.
Disclosure: At the time of publication Roland had a long position in Sylvania Platinum.
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12 comments
Interesting article. As a trader who has used price volume action in the past to achieve some great returns, the biggest takeaway for me regarding momemtum is not so much the results over a set time, but more having a methodology where you attempt to time your entry and exit time to suit the trade you take. I think also banking some profits along the way on a good run helps to protect any sudden downturns. Taking any trade in a weak market where sentiment is against you is for me personally pretty much gambling in a pure form. It may work out in the long run or may not. Timing the market and mitigating risk is I think essential.
Timing the market is 'day trading' - a double edged sword, but agree - your an "Assassin" or the other ones, "connoisseur" I think, with some rabbits inbetween.
I'm a chartist (technical analysis / teal leaf reading) but 'do not follow my own rules' - there is the problem (mine) - nice to have time and rules. Otherwise the game is fairly easy.
Whilst Trump has been in the White House momentum has taken on a new dynamic - tomorrow will be interesting (Fridays) - Iran surrenders and agrees to a secular democratic vote. Israel nukes Tehran. The Administration issues a 'gold standard CFD' or whatever other scams to clear the trillions of debt.
My question is why has 'gold' fallen. There seems no sense in this market - too much paper, margin trading to make any real price analysis. As Ben Graham said price is what you pay, value is what you get - and now Gold is on Sale imo and Silver but in my short experience this seems a dangerous metal to play with.
Anyway better than betting on football (Jarvis please turn on the 'Golden Dome' on my Stocko account - it's easy a simple switch).
Hi Harry, Im a little bit miffed as to why gold being a natural safe haven is going down. From my experience it does pay to have rules and be strict with them. Your assesment is spot on I am a bit of an " assasin " trader where I try to take emotion completely out and buy and sell according to rules. It works really well in a strong market and gives protection to get out as a market or stock weakens. I am currently 100% in cash, with the very odd exception (occasional short) and have been so from around the first week after the war started.
Hi Momentum what signs would you be looking for to re-enter the market aside from the obvious peace deal hope.
For me to re-enter there would be need to be a change in market sentiment. Whatever the market believes is a positive change eg: Trump saying the war is over we have achieved our objectives, Israel echoing the sentiment and Iran claiming victory at the same time would probably be a good one. Essentially I react to what the market is saying rather than what I think. Sometimes it will be obvious other times a surprise. The really obvious change in past years was the day the vaccine discovery was announced during Covid. I remember seeing the news and the almost immediate market reaction and threw everything I had at it. At that point the market was so strong it was much harder to lose money than to make it.
I usually have an easy come easy go attitude to investing but I am currently starting to feel the pain. Now regretting not also having gone to cash it would be interesting to poll those who have already done so, or who are considering evasive action should the downturn continue. FYI I have a FOMO style of stock picking with many positions ( Average size portfolio capital acc. to Stockopedia) but personally don't ever see trading fees as an issue. Finally , thank you Roland for your endeavours and a thought provoking thread.
Hi Phil, FOMO is quite common and I have in the past been guilty of it. I personally now find it easier to stick to a set of rules and just be ruthless with them. Sometimes when I sell , the stock reverses and goes back up. I have learned to ignore that and it has served me well in the long run, but especially so in a weak market. It is a natural instinct and bias not to want to let go as we are then accepting a loss which causes pain. I have found that minimising risk by cutting your losses or locking in your gains is the best strategy to protect income. I think part of the reason we can all get caught out is that in a good market most do well and it can make us get carried away in our beliefs. The real test I find is how do we react in a bad market. Do we cut our losses? Do we scale down? or do we add to our position and average down? Its probably easier as a trader for me to act as I tend to be mostly in stocks for days, weeks and months, rarely years. The most important criteria and rule I say to myself before every trade is how much could I lose? Not how much can I make and if my trades start to not work eg breakouts failing., I start to look at all my positions and scale down or exit if they are starting to show signs of weakness and especially so if market sentiment is telling you that.i think eventually these uncertain times will create a great opportunity to buy stocks at cheap prices. When that will be is currently still unclear.
with likelihood of rising inflation and high interest rates high oil prices and strong dollar massive sell of commodities ( ex oil) and gold
Kevin Matras from the Zacks rank provided some research that showed the importance of price to sales as a defence against 'overheating'. His screens with and without a value filter differed radically in performance. He reiterated the importance of value even with 'trending stocks' and 'explosive winners'. Perhaps a value rank greater than 80 would be a useful addition?
SRB down 14% today gold is past news
Sellers running for the hills, no surprise to find the most volatile to be dumped in this downturn in the markets.
Personally i would ditch the £25m market cap. requirement and the sales requirement and replace with a bid - offer spread less than 3.5% because this type of short term trading gets hanmmered by the spread.
Ditch the operating profit requirement because loss makers tend to be the most volatile and can have dramatic rises when the outlook improves.
Ditch the stock rank style, risk rating and stock rank because it complicates things which are not relevant to a momentum style portfolio.
The stop loss question is always difficult. Ed did an article on this recently. Probably best to try to get some kind of handle on the normal volatility of each stock and put a stop loss outside of that. I do agree that for a short term momentum portfolio you need a stop loss. And yes always sell on a profit warning.