It's all about the MOMO... if not the key dynamic that attracts a trader-- surely in the top 3 -- momentum is highly desirable. It can be seen as somewhat analogous to sailing-- momentum is the wind at your back...

Taken from Stockcharts.com: Generally speaking, momentum measures the rate-of-change of a security's price. As the price of a security rises, price momentum increases. The faster the security rises (the greater the period-over-period price change), the larger the increase in momentum. Once this rise begins to slow, momentum will also slow. As a security begins to trade flat, momentum starts to actually decline from previous high levels.

Thus the wind-- direction and intensity or lack thereof are sought after by Technical Analysts routinely...

Momentum indicators are considered "leading"-- also from Stockcharts.com:

Leading Indicators: As their name implies, leading indicators are designed to lead price movements. Most represent a form of price momentum over a fixed look-back period, which is the number of periods used to calculate the indicator. For example, a 20-day Stochastic Oscillator would use the past 20 days of price action (about a month) in its calculation. All prior price action would be ignored.

Benefits and Drawbacks of Leading Indicators: There are clearly many benefits to using leading indicators. Early signaling for entry and exit is the main benefit. Leading indicators generate more signals and allow more opportunities to trade. Early signals can also act to forewarn against a potential strength or weakness. Because they generate more signals, leading indicators are best used in trading markets. These indicators can be used in trending markets, but usually with the major trend, not against it. In a market trending up, the best use is to help identify oversold conditions for buying opportunities. In a market that is trending down, leading indicators can help identify overbought situations for selling opportunities.

With early signals comes the prospect of higher returns and with higher returns comes the reality of greater risk. More signals and earlier signals mean that the chances of false signals and whipsaws increase. False signals will increase the potential for losses. Whipsaws can generate commissions that can eat away profits and test trading stamina.

Momentum Indicators:

• Aroon
• Commodity Channel Index (CCI)
• Rate of Change (ROC)
• Relative Strength Index (RSI)
• Stochastics (%K, %D)
• StochRSI
• TRIX
• Ultimate Oscillator (ULT)
• Williams %R (Wm%R)

We will look at Aroon, Relative Strength Index (RSI), Stochastics (%K, %D), and Williams %R (Wm%R)

1. Aroon

3. Stochastic Oscillator (Fast, Slow, and Full)

4. Williams %R

Examples:

REXX [NASD]

Rex Energy Corporation

Basic Materials - Oil & Gas Drilling & Exploration - USA

APWR [NASD]

A-Power Energy Generation Systems, Ltd.

Utilities - Electric Utilities - China