Free Trend Following Trade Ideas (Feb 2019 Part 4):
Can you believe it? The market closed higher for yet another week! So there’s no denying it’s sure been a good year for bulls so far! But you’ve got to wonder, can they keep it up? And if so, which stocks will be leading the way?
Well, let’s dive in to discuss all that and more! Plus…
Now before we explore some specific stock charts, let’s quickly recap the big picture trading action. Because this recent bounce sure has been impressive. That’s why I want to take a closer look to see if this can keep moving.
February 2019 Stock Market Update:
To be honest, it’s pretty hard to believe just how sharply the market has rallied this year. And if you haven’t been buying already, you might feel a little late to the party picking up shares now.
And yet the decline in December was also a very precipitous drop. So maybe this rally – as intense as it’s been – is only the rubber band snapping back. But snap back it has!
Thus to get started today, I want to take a step back and review a few index ETF weekly charts to show you just how far most stocks have come. And importantly, how they’re starting to reach levels that have previously marked short-term highs.
So first, let’s start with SPY as a proxy for US large caps. Talk about V-shaped reversal, right?
And as you’ll see in the other indexes below, this sharp rally to start 2019 is a common phenomena across the board. Plus, SPY isn’t the only one coming into zones of potential supply.
Because when you look at QQQ, it’s clear the Nasdaq 100 stocks are still moving in the right direction too…
Finally, don’t forget about the small caps! They led the market on the way down and have also featured prominently in this rebound. The IWM ETF is an easy way to track the Russell 2000
So as you can see, it’s pretty much good news across the board. And I think this week it’ll be interesting to see whether bulls can keep up the momentum. Because of course this burst of buying can’t keep going on forever.
But on the other hand, it feels like everybody is waiting for a pullback. And the market rarely makes things easy for the majority! Thus as usual, I’m going to let price action be my guide.
While I do usually prefer weekly charts because of their great signal-to-noise ratio, the daily timeframes are also worth mentioning. Because most parts of the market have recaptured their 200-day moving average, and with Friday’s positive trading day they finished another week in the green.
Here’s SPY again
So with markets having made huge progress, I think it’ll be fascinating this week to see if bulls can keep running, or whether bears finally make themselves known at these prior resistance levels.
In cases like this, I personally like to zoom into shorter timeframes. But until we see a couple down days in a row, I won’t be getting too worried. Plus I always have a plan for when to sell.
And actually, right now the biggest challenge is finding stocks that aren’t too extended! Since markets have pretty much screamed higher all year, a lot of stocks are overbought. So while the number of new highs look good on paper, there aren’t as many setups with the risk-reward I’m usually looking for.
Now that doesn’t mean there’s not any opportunity. I’m just being a little more selective…
Trend Following Trade Ideas For February 2019 (Part 4):
With the tail end of earnings season wrapping up, the first idea I want to share with you today is Acacia Communications Inc (ACIA). This one really popped on earnings Friday morning, and I’m curious if it can keep coasting higher.
While this one is a little stretched in the short-term, it appears to have been carving out a bottom for quite some time now. And with underlying earnings results pushing the stock back to 52-week highs, I’d be willing to place a bet here.
Next up, Exact Sciences (EXAS) is a stock on my radar as it’s pushing new highs too…
Not only is this stock trending higher, but the underlying business is quite unique as well. So I’d be comfortable investing with the hopes for more all-time highs ahead.
And actually, there are a fair amount of biotech and pharma companies acting well right now. Another one that has my attention is Osiris Therapeutics (OSIR):
Personally, I like the way this stock just continues to trend higher. It is smaller cap and as a biotech it’s a little more speculative. But with any luck it can keep trending in the right direction.
Moving on, the next stock I want to show you is one I currently hold, but which looks like it might be setting up again. Meet Americold Realty Trust (COLD):
To be fair, this is a relatively new chart. But it’s consolidating in a tight range at new highs and I’d be interested in adding to my position on another breakout as it could be the start of the next leg higher.
Finally, I can’t help but point out how well emerging markets have been acting recently (including closing this week at the highs). An easy way to get exposure is with the EEM ETF
I’ve got to admit, I’m quite impressed by the way these stocks have been holding up this year. And I think it’s pretty much safe to say the downtrend of 2018 has come to an end. So keep your eyes peeled for another leg higher.
Now even though picking bottoms is very hard, EEM does seem to be turning around. And notably, unlike most US equities this group isn’t nearly as extended in the short-term so it could be a pocket of short-term strength.
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.
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