Free Trend Following Trade Ideas For October 2018:
The 4th quarter is upon us! It’s hard to believe 2018 is already heading into the home stretch. But even though the year is flying by, there’s been NO shortage of excitement.
So for this week’s regularly scheduled weekly market update, I’m eager to recap what we’ve been through, and where we might be likely to go.
Alright, now let’s get down to business. First up, I want to take a look at the year-to-date prices trends. And then I’ll show you some of the stronger momentum names I’m tempted to jump on.
But first things first…
2018 Q3 Stock Market Recap:
With the last trading day of September behind us, it makes sense to pause and look back for a minute. After all, this past Friday marked the end of the week, month, and quarter.
… So how did it all turn out?
Good question. Because during the depths of the market turbulence we saw earlier this year, it felt like stocks might really be in for some trouble. But luckily…
The violent correction was short-lived, and tech stocks in particular were quick to get back to new highs. And since then, most sectors have participated in the upside off the February lows.
For this longer-term perspective, I think the SPY weekly chart is relative illustrative:
As you can see, although it took a few months to recover from the rapid drop in Q1, the index has drifted higher for most of the late spring and summer.
And let me tell you…
As someone who was a buyer of stocks in March and April, it was really quite nerve-wracking, given some of the fast and deep corrections that were taking place. In fact, there was one day in February where I had 22 different stop orders trigger!
But the good thing is, by using a rules-based approach (defined well in advance!) I was able to hold my nose and buy leading stocks, even though it was uncomfortable (since I was a little scarred from earlier losses).
Yet as it turned out, sticking with the long-term trend has been the right call. Of course, it’s not all sunshine and smiles out there either.
I think one of the biggest differences between global markets in 2017 vs. 2018 is the overseas market participation. Because while SPY has managed to charge higher, most other countries have not been able to follow suit.
An easy way to see this is through the All-Country World Index (ACWI) ETF.
It’s pretty clear, isn’t it? 2018 has been a 9-month flatline compared to the global stock surge we saw last year.
I know this might sound a bit silly but, sometimes the calendar can coincide with inflection points in trend. So while I’m always hesitant to call a bottom, it might be worth watching for a turning point here too.
More specifically, it’s been a few weeks since emerging markets have made a new low. And as the weakest piece in the global stock puzzle, this potential trend change has my interest.
Of course, it’s also entirely possible the recent price action is just some end-of-quarter rebalancing before the downtrend resumes. So until we see a higher high, I’ll be happy hanging out in US stocks.
And on that note, this seems like the perfect time to dive into some specific stock charts…
New Oct. 2018 Trend Following Stock Ideas:
Despite the modest pullback we saw to end September, there’s no denying the long-term trend in US stocks is up. So with this prevailing wind at our backs, let me show you some of my favourite momentum ideas for the first week of October…
And since the oil patch has been acting well, let’s start off with Oasis Petroleum (OAS). To be clear: I already own some shares of this one, but it’s recently gotten going again and I’d consider adding…
Personally, I’m encouraged by the new weekly closing high, especially because it’s above the prior trading range. So if you’re looking for an oil stock, this might be one to keep on watch.
But that’s not all!
Because I also picked up shares of Ecopetrol (EC) recently too. And quite frankly, I really like the way the stock is stair-stepping higher into the weekly close as shown in the chart below (… by the way, there’s a link to all my open positions at the bottom of this article so keep reading if you want to see more stocks I own!)
So what do you think? EC looks pretty good, right? Well, if you wanted a cleaner-looking energy chart, without overhead supply I think it could be worth your time. And from a valuation perspective it also looks reasonable, plus it sports a 2.2% yield.
Now on the other hand if you just wanted exposure to black gold itself, I think the DBO ETF is a really easy way to play it:
In particular, I really like how the chart has pushed to new highs after consolidating for a few months. It’s a clean breakout, and feels like it could keep trending (especially with all the geopolitical headline risk out there!)
Alright. I don’t just want to talk about oil and energy stocks today…
Because another strong sector lately has been the healthcare space. And one of my favourite charts in this group is Abiomed (ABMD). I had a great trade in this one earlier in the year, so I’m happy to see it moving again…
With top-down sector strength, I think it’s possible this one could keep running. The bullish weekly candle out of a consolidation within an existing uptrend is exactly the kind of price action I like to see.
Speaking of sector strength, another area of the market that’s been performing well has been the application software space. And one of my favourite charts in that industry right now is Okta Inc (OKTA).
I wanted to share it with you because you can keep it on your watch list this week and jump on it if buyers start coming back into the name. The stock is near new highs, in an uptrend and not too extended. What more could you ask for!
The last idea I want to show you today is Kratos Defense and Security Solutions (KTOS). It’s a lower-priced small-cap stock so the fundamentals aren’t quite where I’d like them to be. But…
The chart looks good:
And I think as long as you manage risk with position sizing and a plan for when to sell, this could certainly be worth a shot. Because for me, the new closing high after a couple sideways weeks is enough to give this one a try.
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:
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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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