2019 Trend Following Year in Review:
With only a couple of days left in 2019, I wanted to do something a little bit different this week. To finish off the year and set us up for 2020, I thought it would be fun and informative to recap some of the key market trends of the last 12 months. After all, it was a pretty good year to be a trend follower.
Now from a trend-following perspective, this was a notable year with most of the major indexes breaking out to new highs. This was in big contrast to 2018, where markets made an all-time high in January only to end the year on the back foot.
So let me show you what I mean – with charts provided by TrendSpider.
2019 Stock Market Trends in Review:
Whether you’re looking at small caps, large-caps or tech stocks, most parts of the US stock market are firing on all cylinders. And while there are technically still a few trading days left in 2019, the trends look clear into the end of the year.
For starters, here’s the S&P-500 ETF SPY, which is coasting higher to new records each week:
It’s hard to argue with these kind of trends. And outside of the broad market, leading tech stocks of the Nasdaq 100 are also sporting a similar view, as shown by QQQ:
Again, it’s hard to be bearish when prices are making new high after new high. Small caps are but another example as shown by IWM (representing the Russell 2000)
While IWM isn’t above all-time highs, it has bounced back after oscillating in a trading range most of the year.
So looking ahead into 2020…
I’m very curious if these uptrends will continue. From my perspective, I think the line of least resistance remains higher. But sometimes the changing calendar does correspond with changes in stock trends as money managers reposition and rebalance to start with a clean slate.
Now outside of the US, one big area of interest in the next year will be emerging markets. This asset class has been hit hard the last couple years but appears to be finishing 2019 on a strong note, with a notable higher high:
In fact, EEM might even play catch-up to US stocks in 2020 as they are starting to show signs of momentum but aren’t yet nearly as extended.
Finally, all of this rolls up to the all-country world index, which is breaking out to new highs. Here’s the ACWI weekly chart:
So overall, I think it’s hard to argue with these uptrends. If most stocks are firing on all cylinders, I’m cautiously optimistic this upside can continue. After all, there are a number of stocks acting well under the surface.
Now let me show you some of the strongest!
2019 Trend Following Stock Market Leaders:
Rather than highlight one or two specific stock ideas, I want to share some charts of stocks that have been the best performers this year. The reason is twofold.
First of all, stocks making 52-week highs tend to continue making highs. So this could be a good shopping list for trend following trade ideas next year. But secondly…
I also want to highlight these tickers because it helps reinforce that stocks can go higher and higher for much longer than you can think.
For example, I know it can be uncomfortable to buy stocks that have gone up 10 or 20% because it feels like you’re buying the high. But reviewing the biggest trend-following winners from last year can show you that winners can keep winning much more than you’d think.
Consider this short-list below, which I found by simply looking for new 52-week highs on stocks with >$300M in market cap and over 100K average daily volume. These are some of the top trend-following names in 2019:
Sea Ltd +247% – This has been a wild ride but the stock is one of the best performers of the year. It also shows how big upside can come with big downside considering the violent summer pullback in SE.
Model N Inc + 168% – Uptrends can keep trending. MODN has been running all year.
Cosan Ltd + 163% – Here’s a stock that was trending well and has recently gone parabolic. While I’d have trouble chasing this name, it goes to show that stocks going up can keep going up.
Cirrus Logic + 151% – Notice how big moves can lead to big moves. This is a good example of volatility expansion and contraction as the stock went from breakout to consolidation, time after time.
Teradyne Inc + 120% – Here’s a classic trend-following chart, with price bumping and grinding higher for msot of the year.
Generac Holdings + 107% – Look at this nearly non-stop uptrend from June 2019 onwards. It might even be setting up for another leg higher.
ASML Hldng + 90% – Here’s a good example of an expensive stocks getting more expensive. Big % gains aren’t just for penny stocks. High-priced stocks are high-priced because they keep going up!
And keep in mind, even though these are some of the biggest movers, they are just the tip of the iceberg. If you scan broadly for 52-week highs you’ll find a large cohort of stocks coasting higher.
While it’s impossible to say for sure what the future holds, this positive momentum is a good reminder stocks can keep moving higher for much longer than you think. So thank you to all the readers this year and for your support on these weekly updates. I’ll be back to the regular format next week and wish you all the best in 2020.
Now before we finish…
I also want to share my existing trend-following trading positions for US-listed stocks with you. So here they are in a FinViz watch list! Take a look if you’re still itching for more potential trade ideas.
They might be of interest because everything is laid out in charts so you can easily see what’s what.
Because actually, there have also been a lot of great trends this week so I’m quite bullish on many of my existing holdings.
I hope seeing my current stock portfolio helps give you more context on how I’m seeing the current market, AND, where I’m placing my bets.
While I’ve obviously shown you some of my favourite picks for the week ahead, I can also help teach you how to fish for your own trading ideas!
Just keep reading.
Learn How to Scan For Breakout Stock Picks:
If you want to learn more about how I find these kind of stock picks, I encourage you to check out my Breakout Stock Blueprint. What’s that, you ask?
Well… it’s a +90-page PDF… packed with everything I know about finding, buying and trading breakout stock picks.
This Blueprint shares the EXACT step-by-step process I use to find and trade stock picks each week (just like the ones above). So…
If you want to see how to find high-potential-momentum stock picks, learn how to let your winners run and be confident about locking in profits, then this Blueprint is for you.