Weekly Trading Update #25 (Jun 17)
The only stocks you need to watch this week, hand-picked by my proprietary algorithm
Dear subscribers,
Welcome back to My Weekly Stock, where we blend in-depth market analysis with proven momentum-based trading strategies. My mission? Help you navigate the markets with unbiased, data-driven insights that you can act on.
As we head into a new week, it's time for my Weekly Trading Update! Stay tuned to learn more about how my trading strategies work and my performance.
Let’s get started!
THIS WEEK’S SNAPSHOT
Momentum Outlook: The S&P 500 sailed past 5,400 to hit a new record. I am watching closely the growing breadth divergence as gains are concentrated on a few mega caps.
Weekly Momentum Pick: Microsft (MSFT) is my stock pick for this week, a leading company within the Technology sector, trading less than 1% from its 1-year high. Since 2019, my momentum picks have returned more than 400%.
Swing Trade Portfolio: 67% of my portfolio is invested across 18 positions. Alphabet (GOOG, +20%) and Nvidia (NVDA, +48%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 27%.
Trading Week Reflection:
Mega caps continue to outperform, reaching new record highs week after week. Yet, beneath the surface, the average stock is struggling. Many setups I entered, especially in financials and cyclicals, have repeatedly failed, often faltering at the first resistance level. Having said that, I see value in remaining patient, especially as we haven't seen significant pullbacks either.
As mixed price action continues for many stocks, adequate position sizing and a clear understanding of support and resistance levels are crucial. This is why I dedicate considerable effort each week to reviewing performance, trends, and key levels. Even if you don't follow my trades, this analysis can help you filter out the noise.
WEEKLY MOMENTUM PICK
My Approach
I use a proprietary algorithm to collect momentum indicators for each company on my watchlist, such as performance over the last one and three months and the current price vs. their respective 52-week high and low. I then rank the stocks based on each indicator, assigning a score from highest to lowest, and the stock with the highest average score becomes my pick for the week.
From there, I developed a simple trading principle: I buy one stock on Monday at the market open and sell it by Friday's close. I focus on the 30 stocks from the Dow Jones (+ Alphabet). Because the strategy rewards winners, the algorithm usually selects the same stock for multiple weeks in a row.
My Performance
Since 2019, my stock picks have consistently generated strong returns, both in absolute terms and compared to the S&P 500 index. The cumulative return on my weekly momentum picks has been +498% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.
My stock pick was up 7.9% last week, bringing my 2024 performance to 18%.
My Momentum Pick for This Week
My stock pick for week #25 of 2024 is Microsoft (MSFT). The stock has risen 5% in the past month and 6% in the past quarter and is now trading less than 1% from its 52-week high. That makes MSFT the stock with the best momentum profile on my watchlist.
I use a 2% stop-loss and a 6% profit target. Stop-losses are critical elements of any trading plan, particularly in periods of market volatility. I use stop-loss as price levels of interest to manage my positions, but I don’t set them up as automated orders. And as a principle, I never sell on Mondays to give a chance to the trade to work out.
Confidence Level: MEDIUM
Momentum Conditions: Strong | Algo Score: 95
The confidence level is a qualitative assessment based on my experience trading these stock picks. Best-performing picks typically involve 1) supportive broader market conditions and 2) an algo score below 94, meaning the stock has room to run further.
That’s it for the free part of my Weekly Trading Update.
I hope you enjoyed my analysis so far. If you’d like to see more in-depth insights, subscribe to the paid version and get complete access to my short and long-term portfolios!
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