Weekly Trading Update #23 (Jun 3)

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: Sideways price action continued in the S&P 500 last week, but we recovered the 21-day EMA trend line on Friday. As long that holds, the bulls remain in control.

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

• Swing Trade Portfolio: 52% of my portfolio is invested across 14 positions. Alphabet (GOOG, +16%) and Nvidia (NVDA, +23%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 26%.

Trading Week Reflection:

As the sideways price action continued in the markets last week, I had to make several adjustments to the trading portfolio. I have exited 4 positions, all at a loss. This environment isn't ideal for my momentum strategy, which works great on clear directional movements.

Given this, it is no surprise that my top priority currently is capital preservation. To achieve this, I meticulously manage position sizes, which I calibrate based on the specific stock's trading range. This is why I invest considerable time analyzing support and resistance levels. Additionally, I aim to be decisive in exiting positions that don't perform as expected. Although accepting a loss shortly after entering a position is often painful, quickly cutting loss is essential to prevent larger setbacks down the line.

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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 0.8% last week, bringing my 2024 performance to 11%.

My Momentum Pick for This Week

My stock pick for week #23 of 2024 is Walmart (WMT). The stock has risen 12% in the past month and 12% in the past quarter and is now trading less than 1% from its 52-week high. That makes WMT 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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