Trend Following Stock Picks for May 2017:
In the words of Brian Shannon, there are opportunities everywhere! So grab your coffee, and get ready for another weekly edition of trend following stock picks.
So with the French election behind us, and despite the drubbing in SNAP, tech stocks continued to lead the market higher.
Here’s the QQQ Nasdaq ETF closing once again near all-time highs:
And just in case that isn’t clear enough, look at the outperformance of tech over the intermediate timeframe below (graphs from FinViz):
I know it’s hard to feel smart buying Amazon or Facebook at all-time highs, with juicy valuations in a low-interest rate environment. And there are a few positions I’m close to getting stopped out of. But on the other hand…
These are the companies that have been leading the markets higher. And if you’ve been able to let yourself go with the flow, it’s probably more profitable than you might have expected.
For example, sometimes when people think of buying breakout stock picks, they are imagining illiquid micro-cap pump and dump schemes. But that’s NOT what I’m talking about!
Case in point: AAPL. It’s been on a tear lately! But when I first mentioned I picked up shares in January (here), people were lukewarm about the idea at best.
AAPL was supposed to be “Dead money!”
And yet, have you seen the stock lately?
My point is, there are breakouts hiding in plain sight. You just need to know what to look for! Of course…
To be fair, it’s not ALL tech. There are other parts of the market that are doing well too, given the S&P-500 is hovering near all-time highs!
So with this bullish backdrop in mind, let’s dig in to some breakout stock picks that are setting up for next week.
Trend Following Trade Ideas for May 2017 (Part 3):
Overall, stocks have been continuing to trend higher into the back half of May 2017. But here are some of my favourite breakouts to new 52-week highs.
The first one to share is AVGO. The semiconductor index ETF has been on a tear lately. And some of the components, including Broadcom, are looking pretty good.
Here’s a chart:
Regular readers know I’m a fan of top-down trading. And as long as the semis continue moving higher, along with tech at large, I think picks like this have the wind at their back.
Moving to the financial services industry, I also want to feature BR as a potential opportunity. I’ve written before about this unique business and think the company has an interesting competitive advantage.
So I’m happy to see shares perking up again:
I’m curious to watch if BR can get going. It’s potentially coming out of a long consolidation, which could give it a nice bace to launch from.
Another stock that’s emerging from a similar pattern is Brookfield Asset Management. Shares of BAM are perking up, without being extended.
Take a look:
For Canadian readers, you can pick up TSX-listed shares as well. I actually love the look of that potential long-term breakout and am planning to pull the trigger on this Monday morning.
Not bad, right? Look at the run BAM made from 2012 to 2015. What if it’s setting up for a move like that again?
Just something to think about.
Okay, well, switching gears to a younger breakout, I want to show you the chart for shares of SQ. I’d be much more comfortable owning Square than Twitter, that’s for sure.
SQ is sporting a pretty clean consolidation following a breakout to new highs.
Additionally, check out the buy volume that might be indicative of accumulation. That’s the kind of thing that can help push these trends higher for months on end.
Speaking of ever-lasting trends, it looks like nothing can derail Raytheon’s march higher. Just look at this monster trend in the chart below…
To my eye, it looks like these defence stocks are going to continue to play offence. As long as you manage risk carefully, you can still jump on this trend.
Turns out I also have a few Canadian dollars burning a hole in my pocket. And rather than exchange them for USD right now, I’m looking at putting them to work on the TSX.
Specifically, I have an order in to buy POU.TO at Monday’s open.
Here’s what that looks like:
I like the breakout from consolidation. While it might be a fakeout, it could also be a change or character in the price that marks the start of a new uptrend. Anything’s possible!
I should also share that I picked up a few shares of TSM earlier this week. I mentioned it on Twitter, but here’s a recap of the trade:
As I mentioned at the outset, the semiconductors are looking strong and I wanted a piece of the action mid-week when I was stopped out of my EBIX position, so I quickly rotated that capital.
Now one more thing…
Before concluding this weekly update, I just want to give you an update on my current positions. But…
Rather than give you a boring list. I’ve decided to import my portfolio to FinViz so you can see all the charts for yourself. The only thing not shown are a few Canadian stocks, like XIU.TO, PBH.TO, WEED.TO, WCN.TO, EMA.TO and AQN.TO.
Go ahead, take a look. Cool, right?
I think I’ll use this format to share my trend following positions going forward.
I know you might not be super pumped about buying “old” trading ideas. But one of the key things I’ve learned over the years is that breakouts are processes, not events.
That means you don’t have to be super fast to pounce on opportunity, especially with my style of intermediate-term trend following. Let me show you a recent example:
So while I wouldn’t necessarily buy ILG today, it goes to show that these big moves can last for longer than you think.
And as long as you manage risk carefully you can participate with peace of mind.
Speaking of proper trading practice…
While I’ve already shown you some of my favourite picks for the week ahead, I can also 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 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.