Free Trend Following Trade Ideas For July 2019 (Part 2):
Summer is here and the temperature is heating up. And although it was a light-volume week in the stock market, prices continued to grind higher too. So with plenty of apparent momentum, I’m eager to recap the action and share some ideas.
Now let’s take a closer look at the latest leg of this bull market and then zoom in on some specific stock picks.
SPY Cracks New Highs This Week:
Despite light volume, SPY managed to gap higher and hold the gains into the end of the week. It wasn’t without a pullback or two; but ultimately, dip-buyers helped bulls hold on and close the week on a good note.
Here’s the weekly chart of the index ETF:
So looking ahead, I’ll be curious if bulls can keep building on this momentum or whether there will be a pause. One area that might provide some clues are the leading tech and growth stocks of the Nasdaq 100.
Because as you can see via the QQQ ETF – this group of stocks is right at prior highs.
Thus a little consolidation wouldn’t surprise me. Will we see a reversal at resistance? Well, if you ask me I’d expect any dips to be bought given the strong moves so far this year.
Along a similar vein, it’ll also be interesting to see if bonds hold up in the face of Friday’s strong jobs report. Because if fundamental economic data continues to impress, interest rate expectations may rise and put pressure on bonds.
To wit, TLT did reverse Friday after the strong job’s print (although it still remains near 52-week highs). So I’ll be watching closely to see how this asset class holds up and whether investors start to rotate back into equities.
Now as you might expect, on the back of strong economic news, the US Dollar also surged quite a bit last week. And this could cause some short-term headwinds for stocks at large:
Now despite this potential headwind, stocks indexes are near all-time highs and there are plenty of pockets of momentum that look good. Plus, keep in mind the dollar strength is apparently the result of the economy doing well – so, it should’t be that bad.
So let’s take a closer look...
Trend Following Trade Ideas For July 2019 (Part 2):
To start us off this morning let’s review a recent momentum favourite, Alteryx Inc (AYX). And once again, you can see the weekly chart uptrend below is surging along to new highs. So why not hop on for some of the ride?
Now I appreciate it can be hard to buy stocks that have already gone up so much. But sometimes it seems the laws of thermodynamics apply: objects in motion tend to stay in motion.
Another current example of this is McDonalds Corp (MCD). The stock once again closed at a new high after a couple of weeks of tight sideways consolidation:
I like this trade because it’s easy to manage with a stop below the recent consolidation zone. And I think more momentum is certainly possible.
One more stock with a similar look is Synopsys Inc (SNPS), which really got moving this past week. After the breakaway gap higher and sticking the weekly close, I like my chances with this one.
And actually, I think the same can be said for Leidos Holdings (LDOS) too. It’s another one with a gap higher above a consolidation at 52-week highs. Not bad at all…
Now personally speaking, I like these trades because they’re easy to manage and ideally you can just use a trailing stop loss to manage your risk. But I do appreciate that because they’ve gone up so much, they do tend to be on the higher-priced side.
So one lower-priced stock idea that might be of interest right now is BRF SA (BRFS). Brazilian stocks in general have been quite strong recently and this one is something of a poster-child:
While picking a bottom can be tough, the possibility of a new uptrend with a bunch of upside can make the risk worth the reward, you know what I mean?
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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