Free Trend Following Trade Ideas For June 2019 (Part 3):
I’m not sure about your neck of the woods, but around here it’s only just started to feel like summer. One day it’s cold and rainy, and the next it’s sunny and warm. In fact, these back-and-forth changes in the weather forecast are starting to remind me of the stock market.
Because even though we’ve seen lots of action recently, neither bulls nor bears have made much progress the last few months. So today, I want to recap what all this means and then share some individual charts that appear to be showing potential.
Okay, before we dive into specific stock charts though, let’s take a quick look at the bigger picture. Because there’s one elephant in the room next week, which we might as well address head on.
June 2019 – Stock Market Overview:
I find it helpful to start with the big picture to try and get oriented. By being aware of the market environment, and some of the more prominent financial-news-narratives, I can better align my expectations with reality. And that helps make trading easier.
So first things first, let’s take a look at the major indexes, and the probability of a rate cut at the upcoming Fed announcement (because that’s all anyone’s going to be talking about next week).
What Does The Market Expect From the Fed?
With Fed Powell perhaps speaking a little more dovish lately, it’s fair to wonder what the market expects heading into this potential rate hike. One easy way to keep your finger on the pulse is with the CME Fed Futures charts.
You can see below that by end of year, markets are currently pricing in a high likelihood of at least one rate hike. Although, for the current meeting traders are handicapping the odds of a rate cut at one in four.
Intriguingly, while some global macro data appears to be slowing there’s a fair case to be made that US economic data is chugging along reasonably well, with retail sales hitting a new high for example. So with this somewhat mixed picture, expect some volatility.
Because while US stocks seem to be consolidating their recent pop higher, this could change with the right or wrong words from Fed Powell. For now though, SPY is just trying to hold onto the gains from the week before.
Here’s the weekly chart to remind you:
For more context, you can zoom into the daily chart where the tight consolidation actually looks reasonably good:
So all things considered, this trading range the last few days has been rather orderly. And it’s also encouraging that while relatively flat, the 200-day MA has been holding as resistance. Plus despite the recent consolidation, we’re still below all-time highs.
So overall, it feels like a rangebound market. That means breakouts are less likely to follow-through, and I for one am trading with smaller than average position sizes. Because in addition to the choppy top-down picture, I’m a little concerned that risk-off assets are some of the ones looking best.
Risk-Off Assets Gaining Momentum?
In general, I feel more comfortable leaning bullish when growth-oriented stocks are leading the pack. In contrast, right now it seems to be the more defensive parts of the market taking the lead. For instance…
One of the strongest groups the last month or so has been utilities. And their strength has been especially notable as bond yields have come lower. Along the same lines, big yielding REITs have also seen a surge in buying lately as people reach for investment income to offset rising bond yields.
Here’s a chart of the utility ETF, XLU, to show you what I mean:
As long as utilities are surging up while growth stocks take a pause, I’ll continue to tread carefully with any new buys. Further, when you look outside the stock market, bonds are catching a bid and even gold has been acting well.
So tread carefully and try to keep that context in mind as we look at some specific trade ideas…
June 2019 Breakout Trade Ideas:
Alright, since I’ve been keeping you updated about my swing trades, let’s start there. And then I’ll show you some stronger long-term trend following candidates I’ve still got my eye on.
June 2019 – Swing Trading Update:
In case you haven’t been following along, I’ve been sharing my adventures in swing trading the last few weeks. Unfortunately the market hasn’t served up a ton of opportunity lately so I’m mostly sitting on the sidelines. But I’m keeping my eyes and years open. So…
As a quick update on the trades I mentioned last week, NEO and EHTH have both started to drift into the green. They aren’t big gains just yet; but, I’m hoping they’ll continue to benefit if the market firms up.
And new this week, I also picked up shares of OKTA and CYBR. They are small positions but I’m hoping they get running again, if the market overall can cooperate. Neither of them have really gotten moving from my entry earlier last week. I’ll try to do dedicated blog posts for any new swing trade ideas, but it was a busy week so I hope this update suffices.
Now let’s talk about some longer-term bread-and-butter ideas.
Trend Following Trade Ideas For June 2019 – Part 3
With the markets stuck in a bit of a range at the moment, my expectations are muted for the current crop of breakout stocks. But here are a few that caught my eye heading into Monday’s opening bell.
First, one of my favourite charts is an existing holding of mine. Americold Realty Trust (COLD), has been trending higher since its IPO. With another strong week in the books, I’m optimistic it can keep moving in the right direction:
Plus, COLD recently put up another earnings beat, and with no overhead supply to slow the stock down it could keep grinding up.
Now another approach in these markets is to watch for stocks consolidating near all-time highs. Then you can buy the pullback, or watch for a breakout.
One good example of this kind of chart right now is Darden’s (DRI):
Personally, I’d prefer to wait for a breakout rather than anticipate. But buying on a pullback as we’re currently seeing can provide good risk/reward, if you’re willing to be patient.
Moving on, another stock with a similar look is Ensign Group (ENSG). It’s near highs and looks like it might be ready to pop again:
Again, this one is trending nicely on the weekly timeframe, without being too extended.
That said, I also appreciate the appeal of trying to find new uptrends from potential bottoms. One such example right now is the Mexican airline, Controladora Vuela Compania de Aviacion (VLRS):
If you liked lower-priced ideas, this one might fit the bill. Plus, with Mexican Tarrifs off the table (for now at least) maybe this one could keep moving off a potential bottom.
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.
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