Free Trend Following Trade Idea For November 2019 (Part 1):
I don’t know about your neck of the woods, but with the clocks falling back up here, it’s starting to get cold. Lucky for me, the stock market is heating up. So this weekend I’m trailing my stops and looking for new ideas.
Let me show you what’s on my radar. Plus…
So as I was saying, it was another strong week in the market. To help set the stage, I want to show you some of the trends on the major indexes. After that, I’ll focus in on one particular stock ideas that’s caught my attention with a strong breakout. Sound good?
November 2019 – Stock Market Overview:
Okay, as you know this popular large-cap benchmark attracts a lot of eyeballs, and right now it’s trending higher without any resistance in sight.
And it’s not just the S&P-500! Large-cap tech stocks are also following suit. Here’s the QQQ ETF showing how the Nasdaq 100 coasting higher too:
The other interesting thing to keep in mind is how strong things have been going outside US markets. For the first time in almost two years, both US and global stocks are breaking out together.
Here’s the all-country world index chart I’ve been tracking for the last few weeks to show you what I mean:
It looks like global stocks are finally moving in a coordinated fashion, and this kind of momentum could be a boon moving forward (as it was throughout 2017).
Outside of the stock market, it’s also interesting to see how bonds are faring, using the TLT ETF as a proxy:
With the Fed lowering rates again, it might not be a surprise to see bond prices bouncing. But for now it also seems like TLT strength hasn’t been a headwind to stock. So I guess both are capable of rallying (while gold hangs in there too), – perhaps on the back of a softer US Dollar.
In any case, with the S&P-500 back at all-time highs, there are plenty of stocks showing up on my FinViz scans. And actually, a lot of my current holdings are flashing fresh entry signals.
But let me show you one of my favourites right now…
New Trend Following Trade Idea For November 2019:
With so many stocks hitting new 52-week highs, we can afford to be picky. And while there are plenty of ideas to choose from, the one that really has my eye this weekend is The Toro Co (TTC).
Just take a look at this breakout:
Now it’s true TTC has already moved a lot last week, but I think it could be setting up for another leg higher so I’d be willing to pick up shares with a trailing stop, $6.10 below entry.
Plus, before last week’s earnings-driven breakout, TTC had been going sideways for almost 15 months! So this long-term reset could act as a launching pad for the next part of this uptrend.
The other reason I’m cautiously optimistic on continued upside here is because of the underlying fundamental trends in TTC. Because over the long term, I think fundamental results ultimately drive the stock price. And when technicals are aligned with the operating business, big winners can ensue.
So how can we see these fundamental trends? Well, my favourite way to do this is to look at the financial data from the last 5-10 years. This way, you can see how things are trending.
And in the case of TTC, you can see most of these financial measures are moving consistently in the right direction:
To summarize here:
- Revenue has been consistently trending higher. And actually, TTC just signed a long-term deal, which helped them increase their top-line forecast next year. So these sales numbers should keep moving in the right direction.
- Operating Margins have also been improving consistently, so more of those top-line sales are falling to the bottom line. Cha-ching!
- And thus as you’d expect, Earnings-per Share have also moved higher year-after-year. With any luck these numbers can continue to accelerate in the years ahead and support the stock price.
- The reduction in shares outstanding also helps underwrite this trend.
See what I mean? At a glance this business is chugging along nicely.
But we don’t have to stop there: Another way to double-check this kind of trend is to look at the returns management has been earning over the last few years. Here’s another view from Morningstar showing a consistent return on equity, assets and capital over the same period:
With the business acting well, and the stock price starting to perk up too, I think the line of least resistance could be higher. Of course, I always recommend you do your own due diligence but these are the reasons why I am considering picking up share of TTC in the week ahead.
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…
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