Are You Ready For These December Stock Picks?

2016 is coming to a close. But December 2016 still has a couple of weeks left. So if you’re looking to press your stock market performance into the end of the year, you’ve come to the right place.

Because everywhere I look, I see stocks that are breaking out. Not only are my past stock picks continuing to hit new highs, but there are a ton of fresh ideas to share as well.

And if you’ve been following along with the trade ideas I shared last week, or the week before, or the week before, you’ve probably been knocking it out of the park!

So naturally…

I’m excited to share some of my NEW favourite stock picks with you today, as December 2016 wraps up. Sound good?

Great. Put on some holiday music and get ready for some breakouts.

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Top-Down Trading Analysis for December 2016 Part 2:

If anything, my biggest challenge this week was whittling down the list of stock picks to a reasonable size. The NYSE cumulative advance/decline is at new highs and so are the S&P-500, Dow Jones and Russell 2000. It was hard not to overwhelm you with great stock picks!

dow jones decmeber 2016 trend following stock picks

With indexes across the board breaking out, I don’t know how the financial news media, and the public in general, can be so pessimistic and fearful about stocks. With fund managers skeptical of US equities and high in cash, the contrarian in me thinks this bull-run could just be getting going.

Another piece of context I want to share, before getting to  the specific stock trade ideas, is the recent sector performance. Heading in to the end of the year, I find it can be helpful to look at what’s working and what’s not. So here’s how things have been playing out the last 3 months.

trend following stock picks December 2016 part 2 sector performance

As you can see, the divergence is pretty stark. Plus, fund managers may decide to sell losers to capitalize tax losses. And they could pour into what’s working in order to maximize their chances of padding returns into the final annual reporting period. Make sense?

Another thing to keep in mind about the sector performance above is that the winners are doing MUCH better than the losers. While the losses in healthcare have been serious, the gains in conglomerates have outpaced them by a factor of 3!

Overall, I think this is a very bullish backdrop. While it’s always easy to cherry pick economic or political facts to create a narrative, price is screaming to me that it wants to go higher.

With that in mind, let me share some specific stock picks to help you pad your portfolio into the end of the year…

Trend Following Stock Pick Breakouts for December 2016:

Now let’s cut to the chase with these trend-following stock picks, most of which are in the midst of breaking out. And while I know it can be uncomfortable to buy stocks when they’re making big moves, it can also be profitable.

First up, I want to share Tessera Holding Corp (NASDAQ:TSRA). This is a company I’ve owned for a little while now, and given the recent strength, I’m looking to buy more. As shown below, I’d plan to pick up additional shares of TSRA Monday with a stop-loss order at $39

trend following stock picks December 2016 part 2 TSRA

Now while TSRA looks strong, a slightly more middle-of-the-road stock pick worth sharing is Microsite (NASDAQ:MSFT). It seems ever since Satya Nadella took the throne as CEO, this mega-cap has only gained momentum.

trend following stock picks December 2016 part 2 MSFT

Again, in the spirit of eating my own cooking, I’m long MSFT from just over $43. Considering the recent strength, I’d be happy to buy more shares come Monday. I know you might consider this a boring behemoth of a stock. But the trend is decidedly up. And that’s not even considering the 2.5% dividend. What’s that old saying about objects in motions, staying in motion?

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Next up, let’s take a look at Dorman Products (NASDAQ:DORM). This company has been rolling lately. If you look at the shorter-term chart, you might get scared that DORM is stretched.

But check out this long-term view:

trend following stock picks December 2016 part 2 DORM

As you can see, even though DORM is stretched short-term. It has been going sideways for years. The interesting thing to me though, is that the last time DORM broke out of it’s multi-year consolidation it went up over 500%!

So now, let me show you how I’m trading DORM and how you can tag along if you want.

trend following stock picks December 2016 part 2 DORM

Now I’m not saying DORM is going to the moon tomorrow. But if you want to swing for the fences, you have to be able to jump on a trend even if it’s not at your most preferred entry price. Otherwise, the market will leave you in the dust. Don’t be pennywise and pound foolish.

Everybody is waiting to buy on the sidelines. Sometimes you just have to grit your teeth and make the uncomfortable decision to buy. As long as you use a stop-loss to manage risk carefully… (which is an absolutely MUST!)… then it’s not so bad.

Let me show you what I mean with a real-time stock pick…

An Example of Averaging Up Into a Current Stock Pick:

Still not convinced you should buy stocks at the highs? Well, regular readers will know that in May 2016 I featured TTC as a stock pick. At the time, it was trading at new highs. Then…

In November, after the stock was up 25% not including dividends, I mentioned it again. I noted the stock looked stretched. But…

trend following stock picks December 2016 part 2 TTC

As you can see above, just a few weeks later, Toro Corp (NYSE:TTC) is up another 10%. The point is, sometimes you need to buy a great stock at a price that’s not as great as you’d like. As long as you manage risk, that’s okay.

Now, for more stock picks

I don’t want to overwhelm you with stock picks this week. But there are so many breakouts everywhere I look. Another stock I bought this week was JP Morgan Chase & Co (NYSE:JPM). Again, it looks hard to chase it here. But if you use a stop-loss and keep the position size small I think it’s a reasonable risk reward.

trend following stock picks December 2016 part 2 JPM

I’m currently long JPM from $83.25 with a stop just under $79. I think you could add here with a similar stop. Just look at all that buying volume!

If you want more financials, I think Home Bancshares Inc (NASADQ:HOMB) looks good too, with a stop-loss around $25.75 if you were to enter now.

trend following stock picks December 2016 part 2 HOMB

Finally, I’d be remiss if I didn’t mention that Berkshire Hathaway (NYSE:BRK.B) finally looks like it’s ready to get going after topping out in late 2014. If you remember the sector-performance chart above, you’ll notice BRK.B has the best of both worlds: conglomerates and financials. If market trends can continue, Buffett stands to benefit!

trend following stock picks December 2016 part 2 BRK.B

Now, before this list starts to grow out of control, there are a couple more ideas I want to mention…

Other December 2016 Stock Picks Worth Reviewing:

Last week I featured a number of ideas that continue to set-up nicely. In particular, CALL is continuing to act very constructively. Plus, a lot of the November stock picks are still acting strongly too. And of course…

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