Free Trend Following Trade Ideas For August 2019 (Part 3):
What can I say? The wild ride in the stock market just keeps rolling! Because with the major indexes down for the third week in a row, and with wild intraday swings most days, traders and investors alike are being tested with fear and uncertainty.
But on the other hand, this kind of market turbulence can also help reset trends and plant the seeds for new winners. So in today’s weekly update, let’s get started by recapping the big picture price action and then share some specific stock charts.
So first, let’s start by looking at how the major asset classes are performing. After all, some of the inter-market trends taking place right now are nothing short of impressive…
August 2019 Asset Class Recap:
As I was saying, while the stock market has been chopping around sideways the last two weeks, other assets have been trending strongly.
In particular, bonds and gold are continuing to show incredible momentum in the short term. In fact, it’s almost starting to look downright parabolic!
Even though I’ve been following both of these assets for the past few weeks, it’s a great example of how trends can last much longer than you might think! Don’t believe me? Well, first take a look at the TLT ETF as a proxy for long-term bonds:
It’s an impressive bid bonds are catching, right? And with the stock market so volatile the last few weeks, I guess you could argue this is how treasury bond prices are supposed to be acting.
Along the same lines, gold continues to gain steam too. And whether you chalk it up to inflation, risk-off, or something else entirely there’s no denying that the price of GLD has been flying!
As you might expect then, these gains in risk-off and alternative asses seem to reflect indecision in the stock market. And for the third straight week in the row SPY was under some serious pressure with bulls and bears fighting for control of the tape:
For now, I’m doing my best to follow price. But with the increased volatility recently, it seems as though the main direction might be sideways.
And it’s not just US stocks. Emerging market and European stocks are holding the line for now, but they may be on the verge of breaking down. Stay tuned.
Looking at the All-Country World Index (ACWI) ETF, you can see prices are still well below their January 2018 highs and deep in the middle of the big sloppy trading range.
So in this environment, picking stocks isn’t exactly a walk in the park. And to be honest with you, many breakouts are more likely to fail than when the indexes are just coasting along higher.
Personally, that’s why I like to focus on weekly stock charts that help tune out some of the noise. I also put a little bit more emphasis on fundamentals to try and find stocks that are more likely to trend for the long-term.
Now with that in mind, let me show you what I mean…
Trend Following Trade Ideas for August 2019 (Part 3):
With the markets moving sideways in volatile fashion the last few weeks, there aren’t all that many breakouts. The good news is, the stocks that are still trending higher have really affirmed their leadership. And so I’m excited to show you a few of my favourites!
First then, I want to review a couple of my current holdings that are acting well and flashing fresh entry signals.
One such idea that keeps coming up (literally) is Americold Realty Trust (COLD). Now to be fair, I’ve mentioned this one on the blog a few times in the past. But with interest rates under pressure I think this REIT deserves a second look:
With income-oriented stocks acting relatively well, I’m hoping COLD can keep benefiting from top-down tailwinds that will allow this low-volatility uptrend to keep grinding higher.
Somewhat similar is the chart of Paycom Software (PAYC), which has been consolidating near all-time highs the last few weeks:
I already own shares of PAYC but if the strong get stronger I’ll consider increasing my exposure. I think the current setup shows a reasonable risk/reward opportunity for this long-term trend to get running again.
As for some new ideas, one chart that has my eye is Church and Dwight (CHD). Because not only did the stock charge back to new highs this week, but it’s also a consumer staple that could benefit from further risk-off price action:
Now since the market environment is quite volatile at the moment, I’m inclined to give this one a little bit of wiggle room. But the strong and proven consumer-brands under this parent umbrella, combined with the long-term uptrend, make me cautiously optimistic CHD could continue to trend higher.
Along a similar but less volatile note, I also like the look of Arrowhead Pharmaceuticals (ARWR), which has just popped to a new closing weekly high:
With the major market indexes struggling to get going, I’m always interested in stock charts that are standing out like this. Can relative strength beget more relative 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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