Trend Following Trade Ideas for June 2017 (Part 3)

Welcome to another weekend edition of trade ideas! It was another exciting week in the market, punctuated by monetary policy news and creative acquisitions.

So I’m eager to recap the action and share some trading plans for next week.

Sound good? Then let’s get into it.

I think the first thing worth discussing is the performance of the market overall…

Top Down Market Analysis for June 2017:

The reason this top-down analysis is at the forefront today is because of the drastic sector divergence we saw last Friday afternoon.

If you’ll call recall…

Last week’s stock picks highlighted the vicious selling in tech, contrasted with furious buying in financials.

So how did things shake out this week?

Well, although the Nasdaq took a little tumble, the Dow actually gained ground.

And here’s a look at the weekly SPY chart to help you get oriented:

Trend Following Trade Ideas June 2017 Part 3 SPY

Not bad, right? We’re consolidating near all-time highs, and the long-term uptrend remains firmly intact.

By the way…

The ACWI all-country world index ETF chart looks quite similar, with a doji candle near the high. So for now, global stocks remain in an uptrend.

Now… as for the sectors… you can see for yourself below.

Here’s a heatmap from FinViz showing 1-week performance across market sectors:

Trend Following Trade Ideas for June 2017 (Part 3) finviz heatmap

As you can see, there are pockets of strength and areas of weakness. So pick your spots carefully.

Personally…

“I prefer to buy what other people are buying!”

While we’re at it…

Let me share a couple other thoughts that jump out when looking at the weekly results above:

  • Healthcare continued to hold up well, as I speculated might be the case a few weeks ago (here). I’ll be keeping a close eye on this space, especially if tech continues to weaken.
  • AAPL continued to sell off, in stark contrast to how it’s acted this year. You’ll recall I was annoyed last week because I got stopped out. But it ended up being a good thing!
  • Always remember there’s event-driven risk with individual stocks. For example, I got stopped out of WMT Friday on the AMZN-WFM acquisition news. That’s just how it goes sometimes. 

Now…

One thing that isn’t shown in the sector and stock performance graph above are treasury bonds.

And I want to bring them up… because…

I recently mentioned the TLT ETF looked like it could be filling that big gap from before the election.

And if anything, the evidence for this bottom pattern has only grown stronger:

Trend Following Trade Ideas June 2017 Part 3 tlt

Of course, I’m no macro specialist. And I don’t pretend to play one on the internet.

But if I had to guess, USD weakness might be contributing. Although all I can tell you for sure is TLT is making higher-highs.

Moving on…

Before we get into this weeks new stock trading ideas, I want to give you a quick update on some sales I made this week.

Because in case you weren’t paying attention, we just endured a fair amount of volatility in stocks. And my portfolio wasn’t immune to it…

I got stopped out of SHOP.TO (for a +135% win!), LMAT (+15%), SBUX (-1.9%), WMT (-1.6%) and LEA (+10%).

Now, let me show you some of the trend following stock picks I’ve just bought…

Trend Following Trades Made in June 2017 (Part 3):

Despite the mixed action in the markets, there were still some great breakouts to be had this week…. you just need to know where to look!

And as a result of the sales I made during the week and last Friday, I had a bunch of free cash to put to work.

So for this week’s trade ideas I want to show you all the recent buys I made this week (including where my stop-loss is).

Plus… keep in mind…

I JUST entered these trades. So for example if you were to buy them Monday morning (not a recommendation), you could probably get filled within 1-2% of me (in some cases you could even get a better entry!)

And remember…

Since I’m chasing BIG trends for weeks… or months… at a time, these ideas are definitely still actionable.

So first up…

I pulled the trigger on shares of AJG. Here’s how I’m trading it:

Trend Following Trade Ideas June 2017 Part 3 AJG

Pretty simple, right? This stock is plainly in an uptrend, and I want a piece of the action. So all aboard!

Next…

I also picked up some shares of MKTX. I’m actually slightly down on this one, but remain bullish on the prospects.

Trend Following Trade Ideas June 2017 Part 3 MKTX

Of course, despite my cautiously optimistic outlook I always have a plan for when to sell, including a stop loss.

This is true today, and when I previously traded MKTX (here).

And even though I like the MKTX business model, as I wrote about on Seeking Alpha, I simply prefer to be a disciplined risk managerand always be diligent about position size and stop-loss placement.

Okay… moving on…

Another stock I purchased this week was MCO. I picked this one up Friday and am curious to see where it heads from here:

Trend Following Trade Ideas June 2017 Part 3 MCO

Not only is MCO breaking out to new highs, it’s also a high-quality business with a unique competitive moat.

And the reason I mention that is because….

At the end of day, I like to try and buy breakouts in effective businesses that have durable competitive advantages. Why?

Because in my experience…

Companies that are beating earnings, growing their dividends and expanding their businesses are the kind of stocks that can have multi-month technical uptrends.

When you combine this with the fact that longer-term trend following… (with weekly charts, for example)… takes less time in front of the screen and lowers your commission costs compared to day trading, well, then you really start to understand why I like this approach!

Okay, enough about me and my strategy.

The next stock I bought this week was Equifax. Again, this is another unique business able to earn relatively consistent returns.

And the chart is starting to reflect that:

Trend Following Trade Ideas June 2017 Part 3 EFX

To be honest, shares of EFX haven’t done much the last year. But I’m hoping this strong move higher could mark a change of character.

A stock that’s been trending higher a little more consistently lately is JNJ. I’ve previously analyzed J&J and have a favourable leaning towards the company.

So since shares are trending higher, I’m happy to jump on for the ride.

Trend Following Trade Ideas June 2017 Part 3 JNJ

I might be late to the party on this one. But as I’ve said before, these things can run for longer than seems rational.

And with the healthcare sector looking accommodating, JNJ could benefit.

However…

If you’re looking for something a little less extended, you may want to add MSS to your watch list.

Here’s the chart, and how I’m playing it:

Trend Following Trade Ideas June 2017 Part 3 MMS

While MMS has stalled a little bit, it still hit a 52-week high earlier this week. And I’m willing to stick with it on the chance that it could still breakout.

Alright…

So there you have it! Those are my recent buys, which are all within cents of my entries for now.

And of course, if you want to learn how I consistently find trade ideas like this… well… just keep reading!

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… it’s an 80-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.

See the Breakout Stock Blueprint details!

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