Weekly Trading Update #34 (Aug 19)
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.
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THIS WEEK’S SNAPSHOT
Momentum Outlook: The S&P 500 completed a nearly perfect week, reclaiming its 21-day EMA trend line, a good indication that short-term momentum is back on the positive side.
Weekly Momentum Pick: 3M Co. ($MMM) is my stock pick for this week, a leading company within the Industrial sector, trading less than 2% from its 1-year high. Since 2019, my momentum picks have returned more than 500%.
Swing Trade Portfolio: 50% of my portfolio is invested across 12 positions. UnitedHealth ($UNH, +14%) and Berkshire Hathaway ($BRK.B, +7%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 27%.
Trading Week Reflection:
I'm impressed by the follow-through from the Bulls, and I see many interesting long setups either in progress or forming. As a result, I've been increasing my invested capital aggressively, which, after my planned transactions on Monday, will reach 67%—the highest level in three months.
Many stocks on my watchlist have reclaimed their 21-day EMA. Still, the real test lies ahead as several are approaching their 1-year highs or resistance levels from the early July rally. While I've appreciated the V-shaped recovery over the past few days, I plan to be more deliberate in taking partial (or full) profits if we encounter prolonged weakness.
WEEKLY MOMENTUM PICK
My Approach
I use a proprietary algorithm to collect momentum indicators for each company on my watchlist, such as performance over the last one and three months and the current price vs. their respective 52-week high and low. I then rank the stocks based on each indicator, assigning a score from highest to lowest, and the stock with the highest average score becomes my pick for the week.
From there, I developed a simple trading principle: I buy one stock on Monday at the market open and sell it by Friday's close. I focus on the 30 stocks from the Dow Jones (+ Alphabet). Because the strategy rewards winners, the algorithm usually selects the same stock for multiple weeks in a row.
My Performance
Since 2019, my stock picks have consistently generated strong returns, both in absolute terms and compared to the S&P 500 index. The cumulative return on my weekly momentum picks has been +563% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.
My stock pick was up 2.5% last week, bringing my 2024 performance to 31%.
My Momentum Pick for This Week
My stock pick for week #34 of 2024 is 3M Co. ($MMM). The stock has risen 22% in the past month and 21% in the past quarter and is now trading less than 2% from its 52-week high. That makes $MMM 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-losses as price levels of interest to manage my positions, but I don’t set them up as automated orders. As a principle, I never sell on Mondays to give the trade a chance to work out.
Confidence Level: MEDIUM
Momentum Conditions: Strong | Algo Score: 98
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.
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