Free Trend Following Trade Ideas For August 2019 (Part 4):
Welcome to the last full week of August. Although I’ve got to admit, it sure feels like summer ended early for the stock market. Because as has been the case so far this month, it was another choppy week for markets.
So what should you expect next? Well, in this week’s update I’ll recap the damage, isolate what’s thriving, and then share some trade ideas to keep an eye on.
Now let’s get started by recapping where we just came from. Because the truth is, this market action is a little bit concerning, – especially with all the headline
So let’s see what story the charts are telling us…
August 2019 Stock Market Performance Update:
As I’ve been saying for the last few weeks, the environment for stocks has been a volatile one with many breakouts failing and alternative assets thriving. So it shouldn’t come as a surprise these trends continued to persist once again.
For starters, let’s recap the SPY ETF daily chart to see how US large caps performed.
Now the thing that jumps out at me here is how price action in the S&P-500 actually held up pretty well for most of the week. But, it was never able to break out of that prior trading range.
And then come Friday morning’s tariff news, bears swatted prices back down towards the bottom of the August trading range. So it goes without saying…
I’ll be watching closely next week to see whether dip-buyers step in to prop up prices, or whether we test the June lows. Given the weakness in small cap stocks, European stocks and emerging market stocks, I think it’s possible we do see more downside.
And that’s message is being reinforced by other asset classes too…
Risk-Off Assets Continue To Thrive:
Another reason equity bulls might have cause for concern right now is because it’s not only stocks that are weak. As I’ve been saying for some time, bonds and gold have both been trending well. And this week that trend continued.
Gold in particular has been on an unstoppable run, and with central bankers now urging for the end of USD dominance, the shiny yellow metal may be able to keep running.
After all, prior to this current banana run, gold had gone nowhere for years on end. Could it be ready to make up for lost time?
On the other hand, the possibility of an accommodative Fed and continued consumer spending strength could help propel stocks higher come September. So it pays to be prepared.
Free Trend Following Trade Ideas For August 2019 (Part 4):
Let me start this section by saying these ideas are a little lower-probability than usual. After all, when markets are volatile, correlations tend to rise and breakouts are simply more likely to fail. Ignore these market conditions at your own peril.
However, if you are feeling nimble, you may find some of these charts interesting. So first up…
I want to share a couple potential dip-buying ideas that might be of interest. These are charts in long-term uptrends that pulled back a little bit in the recent bout of market turbulence.
So one idea I’m interested in is Resmed Inc (NYSE:RMD). This is one of the few public companies focused on the business of sleep. It’s an interesting niche and the line of least resistance on the weekly chart looks to be higher…
So as long as you manage risk, I think jumping on trends like this can be worthwhile. After all, RMD has been bumping higher for years on end. And the current pullback could provide a better risk/reward than buying at all-time highs.
A similar chart is that of Leidos holdings Inc (LDOS), which is within striking distance of all-time highs but pulled back a bit during Friday’s sell-off.
I wanted to share these ideas because they’re an alternative to buying breakouts, while still letting these uptrends work for you.
Along the same lines, you can also watch for stocks marking time sideways near all-time highs, like L3Harris Technologies (LHX). You can decide to wait for a stronger breakout, or build a position with a tight stop in anticipation of higher prices.
In any case, be careful with position sizing and always have a clear stop loss. Especially in the current volatile market, as more breakouts are fading and it’s taking longer for stocks to bump and grind higher.
Now the other strategy to consider in a weak market is to look for those stocks showing relative strength. One idea that has really turned around recently is Switch (SWCH).
Even though SWCH faded into the end of the week, the stock has still put in a very impressive performance so far this year. And it looks like this ticker could keep trending – although the broader market environment could put a damper on things so adjust your expectations accordingly.
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.
Can This Blueprint Improve Your Trading?
Learn how I find and trade breakout stock picks… in under an hour each day!