Weekly Trading Update #20 (May 13)

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 S&P 500 has achieved a third consecutive week of gains, bringing it within 1% of its all-time high. We need to break above the previous peak now, or we'd remain at risk of retreating toward the April’s lows.

• Weekly Momentum Pick: American Express (AXP) 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: 47% of my portfolio is invested across 13 positions. Alphabet (GOOG, +14%) and Costco (COST, +7%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 24%.

Trading Week Reflection:

I've significantly increased my investment exposure from just over 20% to nearly 50% in the past week, and growing. Despite this, I remain cautious, especially as the new setups in growth/tech stocks have been somewhat disappointing thus far. Interestingly, the best-performing new positions have been in defensive sectors like financials and consumer staples, and I have entered in none of the cyclical stocks, which is not ideal.

For many of the large caps I cover, their daily charts indicate that April's pullback might be behind us, and they are positioned to resume their bullish trends. However, only time will tell if this recovery can break past previous highs.

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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 +461% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.

My stock pick was up 2.9% last week, bringing my 2024 performance to 11%.

My Momentum Pick for This Week

My stock pick for week #20 of 2024 is American Express (AXP). The stock has risen 11% in the past month and 14% in the past quarter and is now trading less than 1% from its 52-week high. That makes AXP 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: Strong| Algo Score: 95

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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