Weekly Trading Update #12 (Mar 18)
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 financial 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: Last week, the S&P 500 didn't achieve a new high, and signs of weakness emerged on the daily chart. However, the market displayed considerable resilience considering the two hot inflation reports. With the upcoming Federal Reserve meeting, another challenging week lies ahead, which can help us see clearer market direction in the short term.
Weekly Momentum Pick: Caterpillar (CAT) is my stock pick for this week, a leading company within the Industrial sector, trading less than 1% from its 1-year peak. Since 2019, my momentum picks have returned more than 400%.
Swing Trade Portfolio: 75% of my portfolio is invested across 19 positions. NVIDIA (NVDA, +84%) and Bitcoin (BTCUSD, +57%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 24%.
Trading Week Reflection:
My swing trade portfolio remains at its high, with 11 consecutive weeks of gains. The market's recent volatility served as a good reminder of why I like using simple indicators. With the price swings we are seeing, it is easy to get affected by emotions, and my simple, clear rules help remove the noise.
Looking to the week ahead, I remain on the lookout to reduce my exposure, using the following criteria: stocks that have experienced a significant run, facing a key resistance level, and/or showing weakening momentum.
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, it is usual for the algorithm to select 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 +419% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 5x.
My stock pick was down 1.6% last week, bringing my 2024 performance to 3%.
My Momentum Pick for This Week
My stock pick for week #12 of 2024 is Caterpillar (CAT). The stock has risen 10% in the past month and 29% in the past quarter and is now trading less than 1% from its 52-week high. That makes CAT 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.
Confidence Level: MEDIUM
Momentum Conditions: Positive | Algo Score: 99
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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