Weekly Trading Update #51 (Dec 16)

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.

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THIS WEEK’S SNAPSHOT

• Momentum Conditions: The S&P 500 has been coiled tightly over the past two weeks, trading in a narrow range near key resistance at 6,100. With major catalysts like the FOMC decision and retail sales data ahead, the market appears primed for a decisive move as we approach year-end.

• Weekly Momentum Pick: $AAPL (Apple Inc) is my stock pick for this week, a leading company within the Technology sector, trading 1% from its 1-year high.  Since 2019, my momentum picks have returned 635%, cumulatively.

• Swing Trade Portfolio: 80% of my portfolio is invested across 21 positions. Tesla ($TSLA, +61%) and Bitcoin (BTCUSD, +68%) are the best 2 performers. Since its inception in October 2023, my Swing Trade Portfolio has returned 39%.

Trading Week Reflection

While the index has been ranging over the past two weeks, breadth remains weak, with increasing divergences across sectors. Tech has been a standout performer, with many of my holdings hitting new highs recently. Cyclicals, on the other hand, have taken a breather, with several plays pulling back to their 21-day EMA or slightly below. While most have yet to break key support levels, a bounce in the coming days would be ideal. That would confirm the recent slowdown is just a healthy consolidation ahead of a potential year-end rally. Having already locked in profits in several areas, I'm comfortable waiting to see how this week unfolds.

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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 +635% since 2019 (when traded with stop-loss), outperforming the S&P 500 by 4x.

My stock pick was up 0.1% last week, bringing my 2024 performance to 45%.

My Momentum Pick for This Week

My stock pick for week #51 of 2024 is $AAPL (Apple Inc). The stock has risen 10% in the past month and 15% in the past quarter and is now trading less than -2% from its 52-week high. That makes $AAPL 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. 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 (unless profit target is hit) to give the trade a chance to work out.

Confidence Level: High

Momentum Conditions: Positive | Algo Score: 91

The confidence level is a qualitative assessment based on my experience trading these stock picks. Best-performing picks typically involve 1) supportive short-term 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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