Stock Market Ideas and Updates – December 2019 (Part 3):

It’s the most wonderful time of the year! Not only is Christmas around the corner, but stocks continued to coast higher last week. So in this weekend market update I’m excited to examine whether or not this holiday cheer can continue into the end of 2019.

Plus…

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The easiest way to explain the recent changes in the stock market are to show you. So to get started today lets kick off with some of the key index charts. After that, we’ll dive into a specific stock idea that’s throwing off a growing dividend.

December 2019 Stock Market Recap (Part 3):

There’s no need to sugar-coat it, because the price action is already quite sweet. Just take a look at the SPY ETF weekly chart, which continues to move higher and higher into the end of the year:

Stock Market Ideas and Updates – December 2019 (Part 3) SPY

After the volatile pullback we saw two weeks ago, buyers didn’t look back. Price just continued to grind up without too much in the way of resistance. The Federal Reserve held steady with interest rates, and apparently that was a good thing (judging by the price action at least).

Now I will admit, the action in small cap stocks wasn’t quite as impressive. Unfortunately for buyers, this group faded off the highs of the week and the reversal could mark a short-term top:

Stock Market Ideas and Updates – December 2019 (Part 3) IWM

So I’ll be watching closely from Monday onward if this group can stabilize and join the broader market rally. Lately, it’s been nice to see small caps moving higher along with their larger brethren.

Now perhaps the most notable strength this week though was in emerging markets. I guess you can chalk it up to phase 1 of the US-China trade deal, which finally seems to have materialized. In any case, here’s the pop in EEM.

Stock Market Ideas and Updates – December 2019 (Part 3) EEM

Pretty strong, right? Last week I said I was hoping for a higher low from EEM. And it looks like we got it, plus a higher high to boot.

Let’s hope it lasts. Because the the thing I actually like best is how this coordinated global strength shows up in the All-Country World Index:

Stock Market Ideas and Updates – December 2019 (Part 3) ACWI

As you can see on the ACWI chart above, it’s taken nearly 2 years but we’ve finally surpassed the January 2018 highs on a weekly closing basis. This is a very compelling technical signal for me and makes me feel much more confident keeping my exposure to the market.

Now speaking of market exposure, if you’re looking for a new trade idea, I’ve got you covered with one that’s popping up on my radar.

Trend Following Trade Idea For December 2019 (Part 3):

Coming into the end of the year, one of the strongest parts of the market are the consumer discretionary stocks. Maybe it was because of a good Black Friday this year, or just a more buoyant consumer confidence number.

But whatever the case, the XLY sector ETF is looking interesting:

Stock Market Ideas and Updates – December 2019 (Part 3) XLY

The thing I like about XLY is how it’s consolidating near highs, without being too extended. And if the market can keep holding up into the end of the year, it looks like this sector could lead the breakout charge.

Now when I see strong stock sectors like this, I like to try and ride on the top-down momentum in case these similar stocks start all moving together in convoys. One such example that has my eye right now is McDonald’s (MCD).

Stock Market Ideas and Updates – December 2019 (Part 3) MCD

Obviously MCD isn’t at all-time highs, which is my preferred state of affairs. But I wanted to flag it because after an earnings-related pullback last quarter, the stock has found support and consolidated quite tightly. It now looks to be breaking out to multi-month highs.

So personally, I’d be willing to hop on this nascent uptrend with a trailing stop $12.25 below the entry. This way, if MCD keeps trending higher I’ll be along for the ride.

But on the other hand, if it looks like a new stage 4 downtrend is about to begin I’ll be bailing in a hurry to avoid any extended losses. Win or lose, I always have a plan for when to sell.

One other thing I want to point out about MCD that long-term trend followers might appreciate is how this stock isn’t just a capital appreciation opportunity. Because believe it or not, MCD has also been growing the dividend with purpose.

In fact, Morningstar data shows just how meaningful this dividend growth opportunity has been. Since 2011, the dividend has nearly doubled:

Stock Market Ideas and Updates – December 2019 (Part 3) MCD Dividends

If this consistent growth can continue, I think there will clearly be multiple reasons to consider owning MCD. And while the payout ratio of 61% is a little bit high, there’s still room for this distribution to keep moving higher. It’s trend like these that get me excited about quality businesses. MCD looks like it might be one of them.

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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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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