My stock pick for week #34 of 2023 (Aug 21-25)
The stocks you need to watch this week, hand-picked by my proprietary algorithm
Hello fellow investors!
It's Monday, and that means it's time for my weekly stock pick!
My stock selections are derived from my proprietary algorithm that analyzes various technical and momentum indicators to identify the companies the most likely to outperform short-term. This strategy has a proven track record of success, with a return of -3% in 2023 and +335% since 2019.
This week, my algorithm has identified Cisco Systems (CSCO) as a top pick, a leading company within the Technology sector, trading less than 1% from its 52-week high.
I hope you enjoy this week's edition and find it helpful. If you like what you see, please share it with your network on social media and, if you haven't already, subscribe to our email updates.
Stay tuned to learn more about how my algorithm works and my performance. And, as always, happy investing!
METHODOLOGY
My trading methodology is based on a momentum strategy validated through extensive research and back-testing. I use a proprietary algorithm that runs over the weekend to identify stocks showing strong momentum and likely to continue outperforming.
The algorithm collects momentum indicators for each stock in my watchlist, including performance over the last 1 and 3 months and the current price compared to the 52-week high and low. I then rank the stocks based on each indicator, assigning a score from highest to lowest. For example, if I have 30 stocks on my watchlist, the stock with the best 1-month return would receive a score of 30, while the second-best would receive a score of 29, and so on. I then calculate the average score of all the indicators using a proprietary weighting system, 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). It is common for the same stock to be selected by the algorithm for several weeks in a row, as the strategy favors winners, and I have a relatively small stock universe.
PERFORMANCE
I evaluate my weekly performance by looking at the difference between the stock price at the start of the week (Monday's opening) and the end of the week (Friday's closing). I then compound the weekly results to determine my cumulative and yearly 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 stock picks has been 335% since 2019, outperforming the S&P 500 by a factor of 5.
Last week, my stock pick was down by 3.6%, bringing my performance in 2023 to -3%.
MY STOCK PICK
My stock pick for week #34 of 2023 is Cisco Systems (CSCO). The stock is up 5% in the past month, 14% in the past quarter, and trading less than 1% from its 52-week high. That makes CSCO the stock with the best momentum profile in my watchlist.
I trade all my stock picks and typically use a stop-loss of -2% and a profit target of 6%. Stop-loss is a critical element of any trading plan. My performance in 2023, assuming the stop-loss of -2%, goes from -3% to +6%.
ADDITIONAL PICKS (FOR RESEARCH PURPOSES ONLY)
I am conducting additional research to improve my algorithm by testing it on different stock universes. I have decided to share my selections to publicly document and track the performance. Here are the three strategies and their corresponding picks for next week:
LONG - S&P 500 sector ETF: Industrials (XLI)
LONG - US stocks with market cap >$150bn: Eli Lilly (LLY)
LONG - All US stocks: Occidental Petroleum Corporation (OXY)
These picks are based on my algorithm, only enhanced with moving averages on the weekly and 1-hour charts. The principles for trading are also consistent: a buy at the market's opening on Monday and a sale at the closing on Friday.
CONCLUSION
To wrap up, my stock pick for this week is Cisco Systems (CSCO). While it's impossible to predict market movements with certainty, Cisco Systems has the best momentum profile within the Dow Jones, and I encourage my readers to research the stock further.
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As always, happy investing, and I look forward to sharing my next pick with you next Monday!
My Weekly Stock
DISCLAIMER
Please be aware that I currently do not have a position in the stocks mentioned in this article, but I may initiate a position within the next 24 hours. This disclosure is made for transparency purposes and should not be taken as a recommendation to buy or sell any securities.
The information provided in this newsletter is for informational purposes only and should not be taken as financial advice. Any investments or decisions made based on the information provided in this newsletter are the reader's sole responsibility. We recommend that readers conduct their own research and consult a qualified financial professional before making investment decisions. The author does not assume any responsibility for any losses or damages arising from using the information provided in this newsletter.
Always learn something new!