Trend Following Trade Ideas For September 2019 (Part 3):
The strong stock market of September continues! Because for the second week in a row, bulls pushed prices higher and all of a sudden we’re now very close to recapturing the all-time highs set in July.
So in this quick post I’ll show you some of my favourite breakout charts heading into the end of the month.
As usual with these weekly market updates, let’s start with the big picture price action and see what’s happening with the major indexes and asset classes. From there, we can zoom in on some specific stock ideas.
September 2019 Stock Market Update (Part 3):
After an August of discontent, it’s been nice to see the stock market continue to rally this past week. And with a few weeks until the next earnings season kicks off in earnest, maybe we could see more positive momentum into the end of the third calendar quarter.
As you can see on the SPY weekly chart below, prices are scratching on the door of all-time highs.
And the good news is, it’s not only SPY that’s acting well! Because while US Large-Caps had been showing relative strength, small caps and emerging markets did a good job playing catch-up.
First then, here’s IWM to show you how much small cap stocks have rallied:
As you can see, this group of stocks was just threatening to breakdown a few weeks ago. But all of a sudden, they’re back towards the top of their trading range.
Along the same lines, emerging markets have also been participating in this recent round of buying. Here’s the EEM ETF to show you what I mean:
Similar to the small-cap chart, it’ll be interesting to see how this weekly chart pattern will evolve. A higher high could be just the change of pace needed.
If you’ve been reading for the last few weeks, you know one of the divergences we’ve been tracking is the way both bonds and stocks have been acting strong.
But this past week, that piece of the puzzle finally started to resolve itself. Just look at the pullback on the TLT weekly chart. A lot of gains were very quickly undone, as momentum can cut both ways.
Keep in mind, a drop in bond prices also means rising yields. So it’ll be interesting to see how the Fed acts on Wednesday with rate hike expectations starting to fall (albeit still high).
In the meantime though, let me show you some stock charts that are catching my eye.
Free Trend Following Trade Ideas For Sept 2019 (Part 3):
With the market back near all-time highs, it’s a good time to be looking for breakout stock picks. So below are a couple of my favourite charts at the moment.
The first is TJX Companies (TJX). With retail stocks acting well overall, I’m hoping the top-down sector strength will push this one to pop next…
Personally, I like these big sideways bases as they can make for a nice launching pad on the next leg up. I’d wait for a breakout before getting involved, but it’s one to keep on watch.
Next up is GCI Liberty (GLIBA), which has a similar looking shape to TJX above. However, this is a more recent IPO so although it has less of a fundamental track record, the lack of overhead supply could be further fuel if the stock price lights a fire…
And to be clear, I do usually like to focus on higher quality companies with a longer and stronger operating track record. Because when proven fundamentals combine with strong long-term technical trends, the results can be profitable and low-stress.
That said, it can also pay to take what the market is giving you. And with small-cap ideas running so hot right now, I wanted to share a few lower-priced ideas like Seaspan Corp (SSW):
Now admittedly, SSW has already ran pretty far this past week. So it could also make sense to buy this one on a pullback, (should it happen). Otherwise be sure to keep positions small and always have a plan for when to sell.
One more low-priced ideas is Avon Products (AVP). It’s not anywhere near all-time highs, but the stock has been acting quite constructive the last few months.
On the chart above, I’m using the TrendSpider automated heatmaps to identify levels of support and resistance. As you can see, AVP appears to be breaking into a pocket with some room to run before hitting resistance.
Admittedly, this tool is still new for me. But TrendSpider appears to have a lot to offer, including some intuitive tools to help you find the best breakout trade ideas.
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:
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…
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