Weekly Trading Update #19 (May 6)

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!

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THIS WEEK’S SNAPSHOT

• Momentum Outlook: The bulls delivered solid follow-through last week. If the S&P 500 continues to clear key resistance levels, it will likely confirm that the pullback is truly over.

• Weekly Momentum Pick: Goldman Sachs (GS) 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 400%.

• Swing Trade Portfolio: 27% of my portfolio is invested across 8 positions. Alphabet (GOOG, +13%) and Costco (COST, +1%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 23%.

Trading Week Reflection:

The Swing Trade portfolio saw a lot of activity this week as I reshuffled positions, exited old holdings, and initiated new ones. However, many of the new bullish setups are already showing weakness and haven't seen any follow-through. This is typical when momentum shifts and markets consolidate, but it is still frustrating for a swing trader.

This week, I want to share more about how I manage my positions when the market is pulling back and then attempting to bottom. My first priority is to exit decisively once a sell signal is triggered in my algo. This applies even to newer positions, where there's no room for sentiment or patience. I just cut my losses and move on, just like I did with Nike after only a week in position.

I'm also managing the size of my new positions carefully. Normally, I'd allocate 5% of the portfolio, but since the beginning of April, I've allocated a smaller amount. In the case of Tesla and Apple, I even went with less than 3% allocation, as the stocks had a negative long-term trend and large earnings gaps working against them.

In summary, my priorities in this environment are 1) capital protection first and foremost and 2) cautiously starting new positions that may become leaders in the next cycle.

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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 +445% 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 8%.

My Momentum Pick for This Week

My stock pick for week #19 of 2024 is Goldman Sachs (GS). The stock has risen 8% in the past month and 13% in the past quarter and is now trading less than 1% from its 52-week high. That makes GS 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: HIGH

Momentum Conditions: Strong| Algo Score: 93

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.

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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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