Free Trend Following Trade Ideas For July 2019 (Part 1):
I’m on the road again this weekend visiting some family ahead of the Canada Day long weekend. But with US markets open Monday, I don’t want to leave you hanging! So…
As usual I’ll share some big-picture thoughts on the market indexes. And then we can dive into some specific stock picks in case you’re looking for new charts to watch in the week ahead.
Alright, so first let’s cut to the chase and recap the action on the major market indexes. I’ll also show you a couple other trends I’m watching under the surface.
Stock Market Update – July 2019:
Short Week with SPY Near Highs:
Get ready for a holiday-shortened week with both Canada and July 4th punctuating the regular trading sessions. But while you might expect volumes to be lighter than usual, any resolution from this weekend’s G-20 meeting could help start the week off with a bang.
Of course, nobody can predict whether Trump and Xi can work out some sort of compromise. But the initial signs point to a trade deal being back on track. And in any case, it’s hard to know how the market will react. So for now I think all we can do is survey the landscape and prepare.
The good news is…
SPY did coast into the last weekend of June near all-time highs. In fact, the daily chart actually looks quite orderly lately with price in a tight band the last week or so:
And when you zoom out to the long-term weekly chart, you can see that although price has been more volatile and sideways since 2018, we could be close to another leg higher:
The really interesting though is how the action in US stocks compares to the rest of the world. Because while American-focused investors appears to be worry-free, the rest of the world is struggling to find momentum.
Global Stocks In Volatile Trading Range:
Even when trading only US stocks, I think it makes sense to consider how equities as an asset class are performing. That’s because coordinated uptrends can make it easier to ride breakouts as uptrends are less likely to fizzle overall.
On the other hand, conflicting signals from different regions can give bulls some pause. And that’s exactly what I’m going to be watching for in the week ahead.
As a for instance, European indexes (which you can track via the VGK ETF), have hit up against recent highs.
Now I’m not predicting what will happen next. But I’m open minded to the idea this group could run into some resistance.
The same thing goes for emerging markets, which as you can see via EEM, are struggling to overcome the previous highs.
And again, perhaps trade war resolution could be a real shot in the arm for EEM equity bulls. But for now, the odds appear to favour more sideways action.
At the same time, treasury bonds and other asset classes continue to paint an interesting picture.
TLT, Gold, and USD Continue to Intrigue:
There’s no doubt the current US economic expansion is one of the longest on record. But one of the peculiar things about this environment, is how interest rates are still relatively low, despite years of economic growth.
And after the latest Fed meeting, it doesn’t appear central bankers are very keen to raise rates any time soon. So as you’d expect then, bonds continue to trend higher as their yields drop:
Now I did touch on this last week, but I think it’s worth mentioning bonds continue to hang-out near all-time highs alongside stocks and gold.
Meanwhile the US dollar didn’t exactly bounce. But it didn’t break down either. So for now the mighty dollar is holding in:
But that said, this is another trend I’m keeping an eye on because any change of character – higher or lower – could have an impact on how stocks and other asset classes move in sympathy.
Specifically, a meaningful bounce in the dollar could present a challenge for stocks, while a breakdown to new lows could help embolden bulls.
So try to keep that context in mind as we look at individual stock charts that might be of interest…
Trade Ideas For July 2019:
Alright, before we look before to new trend following trade ideas, I want to quickly update you on some swing trades.
Out of the all the recent swing trades I’ve shared, EHTH continues to act the best, as you can see in the chart below:
Luckily, I’ve been able to trail my stop up to $78 from my $73 entry a few weeks ago. And with any luck, this can keep running. So barring a disastrous reversal, I’m optimistic I can lock in some profits.
Now to be fair, it’s not all blue skies and sunshine either. Because earlier last week, momentum stocks did come under some serious selling pressure. As a result, I ended up getting stopped out of CYBR, VCYT and OKTA for small losses.
And that really is the key for me. To make winners like EHTH count, you need to keep losses small and manage your risk carefully while you let your winners run.
Speaking of long-term winners, despite these quicker swing trades the bulk of my portfolio still remains in longer-term trend following positions. That’s also where I’m most interested in finding new ideas.
… So let’s discuss!
Free Trend Following Trade Ideas For July 2019 (Part 1):
One of the things I like most about trading weekly charts is you can avoid a lot of the market noise. Not only can this make your trading easier and lower-stress, but it also takes a lot less time to babysit your positions.
For instance, once of my current holdings that’s started to really perk up recently is Boston Scientific (BSX). I’ve held this stock for a few weeks at least and while it was bumpy at the outset, my wide weekly stop allowed me to stay in the trade.
BSX is now trending higher and flashing a fresh buy signal for me:
From here, I’m hoping BSX can continue to trend higher for another leg up, – especially if the overall market can cooperate.
Now moving on…
I also picked up shares of Curtiss Wright Corp (CW) Friday morning. And I’m pleased to see CW was able to close Friday at weekly highs, indicating more momentum might be around the corner.
Now, you might have noticed I mostly like to buy new 52-week highs. But every now and then I do make exceptions for 50-day highs like this.
To be sure: there is a higher chance of a whipsaw in my experience with this kind of trade. However, catching earlier trends that have more room to run (and allow for better risk/reward), can make it worthwhile.
Just like in life, trading is largely about compromise as different timeframes have their pros and cons.
Next up, Idex Corp (IEX) is a stock I’ve mentioned before that continues to coast higher. With blue sky territory ahead, IEX looks as good to me now as it ever has:
Again, my premise here is that while this stock has already gone up quite a bit, that doesn’t mean it has to reverse and start going lower. In fact, I like the odds of this trend continuing to stair step up.
Finally, I also want to show you the chart of Rio Tinto (RIO). This one caught my eye during my weekend research due to the relatively orderly pullback we saw the last few months.
And with the stock finishing the week on a strong note, I’m optimistic it can keep moving without yet being too extended.
Plus, as I’ve been saying in the last few weekly updates, the metal and mining sectors have started to show some pretty impressive momentum. So if this can keep up, a major player like RIO should benefit.
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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