Weekly Trading Update #37 (Sep 9)
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: Momentum has shifted negative, with the S&P 500 trading below its 21-day EMA. We need to look further down until we reclaim a resistance level, starting with 5,500.
Weekly Momentum Pick: Travelers Company ($TRV) is my stock pick for this week, a leading company within the Financial sector, trading less than 1% from its 1-year high. Since 2019, my momentum picks have returned more than 600%.
Swing Trade Portfolio: 64% of my portfolio is invested across 15 positions. UnitedHealth Group ($UNH, +18%) and Berkshire Hathaway ($BRK.B, +11%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 24%.
Trading Week Reflection:
Last week took a toll on the swing trade portfolio, though it performed better than the broader market. After a week like that, the best action is to step back and study the charts. And there's no doubt that momentum has slowed, and quality setups are becoming harder to find. Even defensive sectors, which held strong recently, now show signs of topping out, facing rejections at key resistance or psychological levels.
I've already started trimming some positions and locking in profits where possible. I'm ready to lighten up further, but I'll wait to see how the next few days unfold and whether the market can stage a bounce from here.
WEEKLY MOMENTUM PICK
My Approach
I use a proprietary algorithm to collect momentum indicators for each company on my watchlist, such as performance over the last one and three months and the current price vs. their respective 52-week high and low. I then rank the stocks based on each indicator, assigning a score from highest to lowest, and the stock with the highest average score becomes my pick for the week.
From there, I developed a simple trading principle: I buy one stock on Monday at the market open and sell it by Friday's close. I focus on the 30 stocks from the Dow Jones (+ Alphabet). Because the strategy rewards winners, the algorithm usually selects the same stock for multiple weeks in a row.
My Performance
Since 2019, my stock picks have consistently generated strong returns, both in absolute terms and compared to the S&P 500 index. The cumulative return on my weekly momentum picks has been +604% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.
My stock pick was down 0.6% last week, bringing my 2024 performance to 39%.
My Momentum Pick for This Week
My stock pick for week #37 of 2024 is Travelers Company ($TRV). The stock has risen 12% in the past month and 12% in the past quarter and is now trading less than 1% from its 52-week high. That makes $TRV 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: Weak | Algo Score: 94
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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