Free Trend Following Trade Ideas For Oct 2019 (Part 2):
After a rough start to the month of October, things bounced back a bit this week. The indexes are below their highs, sure. But they didn’t put in a lower low either. And the way things finished on Friday sure is an interesting setup for next week.
Now as usual, I want to start with some longer-term charts of the indexes to give you a sense of the big picture. And then we’ll look at some individual stock charts that are trending well and might have the potential to keep running next week.
Okay, to start off let’s take a look at the major market indexes. I also have a word of warning given the time of year.
October 2019 Stock Market Update Pt 2:
First, the word of warning: With earnings season around the corner, be mindful of when your companies are reporting. For any charts you see here, along with your usual due diligence please also double-check earnings dates as many of them aren’t yet confirmed. And as you probably know, a little earnings miss can have a BIG impact on your stock price.
You might also be interested in this article about trading strategies for earnings season. Like all of this, it isn’t advice. But it’s what works for me and it might work for you.
Now with that out of the way…
When we were looking at the market last week, things felt a little more precarious. But after the bounce off the mid-week lows, and on a flurry of positive news no less, bulls may have regained the short-term initiative.
For starters, here’s the weekly chart of the SPY ETF to give you a sense for how US large-caps are doing…
Notably, stocks didn’t make a lower low on that weekly timeframe. And ultimately with earnings season just around the corner, the index might still keep consolidating sideways until we start to see a little more fundamental information from the most recent quarter.
On the 30-minute chart provided by TrendSpider below, you can see price did really fade into the end of the week:
.Maybe it’s just a function of how much price ran up during the day. But for whatever reason some buyers weren’t willing to hold over the weekend.
However anecdotally, under the surface there do appear to be a number of constructive setups here.
And with so many negative headlines the last few weeks, the pain trade for most people (either short or out of the market), might be higher.
But all I can do is follow the trend; which to be fair, is kind of a mixed picture. Because while US stocks are doing reasonably well, global stocks are in a much more choppy and sideways environment, as shown by ACWI:
Ideally, I’d like to see all stocks trending up. But with emerging markets and Europe still closer to 52-week lows than highs, it’s hard to get TOO enthusiastic.
Further muddying the water is how bonds continue to hold up. The actively-traded TLT ETF is a good example of the strength in treasuries:
There are all sorts of potential fundamental causes. But for now I’m just paying attention to the price trends overall. Speaking of trends, let’s look at some stocks that are stair-stepping higher.
Free Trend Following Trade Ideas For Oct 2019 (Part 2):
Alright, with the market near highs again there are a fair amount of individual charts that are also looking pretty good.
One part of the market acting particularly well is retail. And while I’ve recently mentioned higher-profile names like LULU and NKE, it’s not just these high-end athleisure plays that are trending in the right direction.
Because as it turns out, the discount apparel space is also running rather hot. And it’s precisely this kind of top-down strength that can help power lasting moves higher.
As an example, first take a look at Ross Stores (ROST), which is bumping higher week-after-week. This kind of slow and steady price trend can be worth jumping on as long as you have a plan for when to sell if things go wrong.
So personally, here’s how I’d play it:
Along the same lines, I also want to point out another retailer that’s busting out this week: TJX Companies (TJX). On the weekly chart below, TJX just put in an impressive candle and managed to go out near the highs. Pretty compelling if you ask me:
My hope here is the sector will keep attracting momentum, and these underlying names will benefit.
But if retail isn’t your style, don’t worry. Because these aren’t the only pockets of strength out there right now.
Another area of the market that’s doing well right now are the semiconductor stocks. And one supplier to the group, Entergy Inc (ENTG) has my eye this morning:
While some of the individual semiconductor stocks are a little bit stretched short-term, ENTG has been consolidating the last few weeks and might be ready for another leg up.
Now the last chart I want to show you is a lower-priced small cap stock, Costamare Inc (CMRE). With shipping companies seeing a surge of demand lately, this one is on my radar…
To be clear, I usually prefer to focus on up-trending stocks at all-time highs rather than pick bottoms. But with the fundamental tailwinds, and a series of higher highs starting to take shape, CMRE might be ready to push higher still.
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.