Free Trend Following Trade Ideas For May 2019 (Part 3):

It was another volatile week in the market – fuelled largely in part by the nonstop news of trade negotiations between the world’s two largest economies. But lucky for bulls, buyers were able to avoid the worse and actually closed the week on a good note, relative to where it started.

As for me, I’ve got a busy weekend of travel on my hands so apologies in advance that this weekly update is a little more to-the-point than usual. I’m typing away from an airport lounge with only a few minutes left until boarding. But I hope you still find this short and sweet edition helpful!

Plus, I’ll be back in regular fine form next week…

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Now as for right now, let’s quickly recap some of the action on the major indexes and then I’ll show you a few of my favourite stock charts as we wait for next week to come around.

May 2019 Quick Stock Market Recap:

US Stocks Remain Choppy and Volatile:

It was an interesting week in the market, in that bears came out of the gate strong Monday morning  – with the major market averages pulling back nearly 3%, bouncing most of the week, before sellers  pushed prices lower into Friday’s close.

So when you zoom out to the weekly chart, SPY does look quite volatile and remains below all-time highs:

Free Trend Following Trade Ideas For May 2019 (Part 3) SPY

Now to be clear, I understand SPY isn’t the be-all-end-all. But in times of high market volatility, correlations do tend to rise and watching US large caps like this can be an easy proxy for equities generally.

And on that note, the same commentary applies to the All-Country World Index:

Free Trend Following Trade Ideas For May 2019 (Part 3) ACIW

As you can see, global equities are also back around their 2018 trading range and it feels like the most likely path forward could be more sideways trading.

And personally, in this kind of trading environment I think it does make sense to temper expectations as breakouts may be less likely to follow through. At the same time, I think it’s hard to buy the dip right here and right now because we’ve already bounced so much from the Monday morning lows.

Plus when you look outside of stocks, there’s another concern I can spot on the horizon

USD Continues To Gain Steam:

For those of you that were actively investing and trading in 2015-2016, you probably remember the impact of the “earnings recession” that followed the monster run in the value of the USD. In particular, large-cap multinationals who reported revenue in USD faced major currency headwinds on their EPS numbers. So I’m curious if this could be setting up again.

Because while 2019 has been good to stock market bulls so far, it’s also been quite the year for dollar bulls, with the USD index continuing to creep higher…

Free Trend Following Trade Ideas For May 2019 (Part 3) USD

So looking ahead, caution may be warranted to the extent USD continues to grind up ahead of the next earnings season. I’m not sounding the panic alarm yet but just something to keep an eye on. Because on the other hand…

There is one leading sector of the market that continues to give me some hope!

Software Stocks Still Looking Strong:

I guess it shouldn’t come as a surprise, considering the degree to which software applications have infiltrated every aspect of our lives. And considering China has had a great digital firewall for quite some time now, there’s probably a case to be made that many of these companies are somewhat insulated from the direct impacts of any tariff escalations.

So with this group acting well overall, I’m willing to hold my nose and look for leading stocks.

Free Trend Following Trade Ideas For May 2019 (Part 3):

With the market bumping along taking 2 steps forward and 1.5 steps back, there aren’t a ton of breakouts setting up into the end of the week. But it’s not totally dire straights either! For instance…

On the software front, there are quite a few names acting well. And on the weekly view, one of the ones that stood out to me was AppFolio (APPF):

Free Trend Following Trade Ideas For May 2019 (Part 3) APPF

While it’s true, APPF has already covered a lot of grand this year, its consolidated constructively the last couple of weeks. And after finish Friday near the highs, I’m curious if more momentum is in the cards here.

Another popular momentum name that has my attention right now is Roku (ROKU). The company put up strong earnings not long ago and the chart has popped into blue sky territory:

Free Trend Following Trade Ideas For May 2019 (Part 3) ROKU

Looking ahead, I’m hoping ROKU can keep coasting now that overhead resistance is out of the way. The orderly consolidation the last few days after the big quarterly beat is also encouraging.

Another stock that’s coming out of an orderly consolidation is Costco (COST). The discount warehouse retailer is not only trending up, but it’s at all time highs.

Free Trend Following Trade Ideas For May 2019 (Part 3) COST

Considering how COST has traded in a relatively narrow range the last month or so, I’m cautiously optimistic this next leg higher could demonstrate some longer momentum.

Now last but not least, while I usually like to focus on 52-week highs, I think younger breakouts like 50-day highs can also be worth paying attention to. In this case, the chart of Solar Edge (SEDG) caught my eye.

Take a look:

Free Trend Following Trade Ideas For May 2019 (Part 3) SEDG

With any luck, SEDG can keep moving higher out of this intermediate-term bottom and keep on coasting on.

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.

And plus…

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.

Speaking of…

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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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…

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