Trend Following Stock Trade Ideas for May 2017 (Part 1):
Talk about a strong week in the market! While Friday saw a little profit-taking, this was a strong end to a stronger quarter.
For the week, the indices were all firmly in the green by over a percent.
The Nasdaq has been particularly strong, already up over 12%. While the Dow Jones and S&P-500 are also both up a respectable 6-6.5%.
Take a look:
Heading into May 2017, there are plenty of potential trend following stock picks that might be of interest to you.
“I’m also going to show you all the stocks in my trend following portfolios.”
Why? Because I think it will make these updates more useful for you.
You’ll be able to better see where I have skin in the game, and where I’m looking to start new positions.
At the end of the day, my goal is to help you become more consistently profitable, but also consistently more confident.
By showing you how I manage these stock picks week-after-week, you can see how it’s possible to hold on for big winners. And in my experience, that’s what makes all the difference!
Before we get into the latest stock picks, I just want to take a quick top-down look at the market.
The reason is…
This big-picture back drop can help keep you oriented in the market. By having your finger on the pulse, you’ll see the forest, instead of getting lost in the stock market trees.
And since trend following breakout stocks works best in bull markets, it’s good to stay attuned to what’s happening in the indexes at large.
So let’s take a quick look…
May 2017 Top-Down Market Analysis:
By getting a feel for the broad market environment, you get a better view of whether or not your breakout trend following stock picks will work out.
In the depths of a recession-drive bear market, you’re better off taking the short side or sitting on the sidelines, rather than trying to catch lightning in a bottle with breakout stocks that inevitably fizzle.
You know what I mean?
It’s just like anything else in life: If you live in a cold climate, you put you winter tires on your car, right? If you go on a boat you bring a lifejacket, don’t you?
Top-down stock market analysis is exactly the same idea. It’s just like checking the wind and rain conditions before going out for a sail.
“You wouldn’t want to sail-off into a hurricane, would you?“
Why not wait for calmer waters?
A little foresight goes a long way.
With that in mind, let’s start by taking a look at the equity markets globally. My favourite way to do this is with the all-country world index.
The ACWI ETF is an easy quick check:
Not bad, right? As you can see, ACWI is breakout out to new highs, with contributions from both developed and emerging markets.
Turning our attention to the S&P-500, you can also see that American stock markets have broken out higher as well.
To be honest, this doesn’t look quite as strong as the ACWI chart, but it’s still pretty good.
Remember, these are weekly charts, so the long-term trend is clearly higher. And I’m all about going with the long-term path of least resistance.
Keep in mind though, not all US stocks are created equal.
While most stocks started the week on the right foot, it was the Nasdaq companies that really closed it out strong.
Here’s the QQQ ETF:
It doesn’t take a genius to see the Nadsaq has broken out, closing the week near new-highs.
And even better…
Under the surface of the tech sector you can see there is strong leadership. Google, Amazon, Microsoft and Facebook are all at or near all-time highs.
“As the leaders go, so goes the entire market. If you cannot make money in the leaders, you are not going to make money in the stock market.”
Conversely… since there’s money being made in the market leaders… we should be able to find some suitable stock picks too!
And in addition to the tech sector, This chart from FinViz illustrates then strong gains in conglomerates and healthcare also helped close out the week, and month.
Since these sectors are still a little ways from all-time highs, it’s possible the rotation could continue.
I mean, I’m not an expert at dip-buying… but… this chart of XLV looks like it could be ready to take another run at recent resistance:
The one big wild card that’s still to be determined is the French election. Early polls suggest the pro-EU Macron will beat Le Pen. But there’s still a week in the campaign.
It seems like markets are pricing in a win for the status quo, but things could change.
I can’t trade off of news events very well. That’s why I always have a plan to sell, every single time I buy a stock, no matter what’s happening in the news.
Speaking of buying stocks… enough with this preamble… let’s get down to it and review this week’s breakout stock picks.
Trend Following Stock Picks for May 2017 (Part 1):
Okay, time to cut to the chase with some new stock pick ideas! But as I mentioned…
While there were lots of breakouts to start the week, we did see a bit of a pullback towards the end of the week.
In this case… and depending on your personal trading style… you can buy the stocks as is, or wait for a new breakout high.
It’s really up to you!
The good thing is…
I do try to focus on higher-quality businesses, so when they get running the trends can last for weeks or months at a time. It’s great.
The first high-quality business I want to look at is Heico Corp. I’ve written before about the fundamental strengths of this business.
But this week it looks like shares of HEI could be getting ready for a big leg higher.
As you can see, HEI pulled back a little bit from the highs, but it may be of interest if it can get going again.
A more explosive breakout this week was JCOM. This unique company has once again moved to all-time highs.
I know it can be tough to chase here. Especially with earnings coming up May 8th.
But if you’re feeling a little more aggressive this one could be worth a look. And…
Given that you’d be playing for an immediate breakout continuation, I’d tighten up the stop a little bit to 1.5 ATR, as shown above. But that’s just me.
By the way, JCOM has also been a strong dividend-growth stock in recent years, so may be of interest to some investors for that reason.
A smaller-cap tech company that’s been a strong performer this weak is Atlassian. TEAM stock had a breakout week and a new weekly-closing high. Here’s the chart:
I’ve written before about this unique agile software company. But it looks like shares could really be moving and with no over-head resistance I like my chances.
One of the better looking large-cap breakouts to end the week was PCLN. Here’s a chart:
I’ve been bullish on this one for awhile (here). But I like this push higher after the multi-month consolidation.
I also think it’s more likely than not that shares of PCLN continue higher from here.
I’d be remiss if I didn’t show you a chart of FB. This mega-cap social media behemoth has been an absolute monster.
I know it can be hard to buy up here. And maybe you wait for a pullback. But this is a strong uptrend… and for now… FB has been putting up the fundamental results to pour fuel on this technical fire.
Now, I know a lot of these ideas are tech-centric, but that seems to be what’s working best right now. So why not go with the flow?
Of course, if you want more potential trend following stock picks (diversified across industries!) then keep reading.
Because first of all, you can always check my favourite FinViz screen.
And even more interesting: I’m about to show you the stocks that currently make up my trend following portfolios.
Stocks in my Trend Following Portfolios:
To help you get some better context for these weekly updates, I’m going to share my personal stock trading positions. This way, you’ll know when I’m talking book!
So… here are my stocks… from biggest to smallest:
So there you have it!
And by the way…
If you want to learn how to find these kind of breakout stock picks for yourself… well… you’re not going to want to miss what’s next
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… you’re welcome to join the wait-list… which means you’ll be the first to know when I reveal my exact entry and exit system for picking breakout stocks. But you need to act now, because the price is going up Monday May 1st 2017!
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.