Weekly Trading Update #32 (Aug 5)

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.

Remember, until the end of July, you can enjoy a 30% discount on your annual subscription and unlock access to all my trading and investing portfolios!

Let’s get started!

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THIS WEEK’S SNAPSHOT

• Momentum Outlook: Momentum has undoubtedly taken a negative turn. We need to look further down until a resistance level is reclaimed, starting with the 5,380-5,400 area.

• Weekly Momentum Pick: UnitedHealth ($UNH) is my stock pick for this week, a leading company within the Healthcare sector, trading less than 1% from its 1-year high. Since 2019, my momentum picks have returned more than 500%.

• Swing Trade Portfolio: 36% of my portfolio is invested across 11 positions. Walmart ($WMT, +13%) and UnitedHealth ($UNH, +16%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 26%.

Trading Week Reflection:

This week was challenging to trade, with most of my setups breaking down. I don't anticipate the weeks ahead to be any easier, especially for a momentum trader like me. After the exits I'm planning this Monday, I will be left with only 20% of the Swing Trade portfolio invested, mainly in a few defensive names. And while I will likely outperform the market as long as the negative downtrend persists, it also puts me at risk of lagging behind when we see a bullish turn.

However, this week has taught me again that there is no point in rushing and forcing trades. Many, including myself, thought Wednesday would kick off another bullish leg, only for the market to decide otherwise. Now, more than ever is the time for patience and protecting gains. This is why I am comfortable waiting for confirmed signals, even if it means missing some initial gains.

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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 +574% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.

My stock pick was down 6% last week (-2% using a stop-loss), bringing my 2024 performance to 31%.

My Momentum Pick for This Week

My stock pick for week #32 of 2024 is UnitedHealth Group ($UNH). The stock has risen 20% in the past month and 20% in the past quarter and is now trading less than 1% from its 52-week high. That makes $UNH 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. I use stop-losses as price levels of interest to manage my positions, but I don’t set them up as automated orders. As a principle, I never sell on Mondays to give the trade a chance to work out.

Confidence Level: LOW

Momentum Conditions: Weak | 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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