Weekly Trading Update #21 (May 20)

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 just closed a 4th consecutive winning weekand sailed past the previous all-time high. Until we lose a major support, we are likely to see more highs in coming weeks.

• Weekly Momentum Pick: Alphabet (GOOG) is my stock pick for this week, a leading company within the Communication Services sector, trading less than 1% from its 1-year high. Since 2019, my momentum picks have returned more than 400%.

• Swing Trade Portfolio: 65% of my portfolio is invested across 17 positions. Alphabet (GOOG, +19%) and Costco (COST, +8%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 25%.

Trading Week Reflection:

The trading portfolio performed as expected during the recent market downturn, offering excellent protection with only a 3% drawdown. It also allowed me to lock in profits and identify potential leaders for the next market phase.

Last week, I increased my exposure, bringing the swing trade portfolio to two-thirds invested. I plan to continue adding new positions in the coming days as more bullish setups emerge. 

Looking ahead, the immediate challenge is that many stocks must surpass their previous all-time highs and sustain the breakout. This step is crucial for confirming the strength of the recovery and that the April pullback is truly over.

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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 +460% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.

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

My Momentum Pick for This Week

My stock pick for week #21 of 2024 is Alphabet (GOOG). The stock has risen 13% in the past month and 25% in the past quarter and is now trading less than 1% from its 52-week high. That makes GOOG 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: 96

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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