Remember That August Crash? (these stocks don’t)

November 13, 2024

Hey Traders,

The other day, I started a series on why I like to focus my trading in on trending stocks.

I talked about how these stocks are like riding an already-moving train. Once a trend’s established, you’ve got the odds in your favor.

Now, words are one thing, but I want to show you exactly what I mean.

The August Market Meltdown

August started off rough.

Between the jobs report and the market selloff that hit on Friday, August 2nd, and Monday, August 5th, it felt like everyone was running for cover.

Even Senator Elizabeth Warren was urging Powell to come home early from vacation and cut rates, calling for an “emergency” move. Panic was in the air, and the market looked like it might just keep falling.

But remember what I say: there’s always a bull market somewhere.

While most traders were spooked, I was keeping an eye on stocks that were still breaking new highs, showing no signs of slowing down.

The strong kept getting stronger — and that’s the magic of trending stocks. Even when the market was throwing a fit, these stocks were quietly moving upward.

Let’s look at how each of these eight picks has played out since then.

1. GDDY (GoDaddy)

Back in August, GDDY stayed strong through that early August downturn.

Even after the market returned to “normal”, it held strong for another month. Then it dipped down to touch its mid-term 50 day trend line.

This is where most traders would give up and say “this trend stuff doesn’t work.”

But look at what happened after that… GDDY bounced off its 50 day trend line, got back up to its short term 20 day trendline and went on to hit new highs.

2. MSI (Motorola Solutions)

Another one that kept its head above water during the August crash was MSI.

This one continued its bullish trend for months, staying above its green short-term trendline for several months.

Then notice how it dipped down, touched its blue mid-term trendline and immediately bounced.

3. CL (Colgate-Palmolive)

CL was riding a solid trend leading up to August and sailed right through the early August chaos without a scratch.

Similar to GDDY, it stayed strong for about a month and then started having some trouble.

A series of lower daily highs and lower daily lows took over, quickly bringing the stock below its green short-term trendline, then its blue mid-term trendline… and finally its red long-term trendline.

The lesson? Trending stocks are powerful, but no strategy is perfect — and not every stock hits a home run.

4. VTR (Ventas)

VTR was in such a strong trend that it actually pulled away from its green short term trendline during the whole August meltdown, bucking the trend while others were dropping.

And that strength continued for over a month until mid-September when VTR came down to touch the green trend line.

It tried pulling away, but ultimately got pulled down near the blue mid-term trendline.

But here’s that trending stock magic again — VTR pulled up and went on to make a new high in late October.

5. IRT (Independence Realty Trust)

IRT was the next ticker that made it onto our trending stocks list back in August.

Like the others, it held strong during that selloff and even nearly 2 months.

It had some trouble for most of October into the beginning of November, but is now back above its green short term trendline.

6. WELL (Welltower)

WELL was another pick that showed strength through the August downturn.

And that strength continued in a major way for nearly 2 months until WELL came down to touch its green short-term trendline and then its blue mid-term trendline.

As soon as WELL touched that blue trendline, it bounced in a major way, quickly getting up above its green trendline, making a series of higher highs.

7. LTH (Life Time Group Holdings)

LTH was another one that stayed in its bullish trend during the August selloff.

And that strength continued for over 2½ months with just a little blip below its green short-term trendline in early October.

The stock gapped down in mid to late October, but has recently come back up above its short-term trendline.

8. PPC (Pilgrim’s Pride)

I won’t lie. PPC wasn’t the best of stocks. If you look at the left side of the chart, it was already showing some weakness in May, getting down below both its green and blue trend lines.

But during that August meltdown, PPC held strong and didn’t waver.

It wasn’t until a month after the selloff that PPC took a quick trip down below its green and blue trend lines before bouncing back up. and going on to make a series of new highs.

Key Insights

As you can see, not every stock held up the same way, but here’s the important thing: out of these eight, seven managed to stay strong, even with a few dips.

Compare that to any random stock you might get a tip on from your barber.

That’s the beauty of trending stocks. Even if they start to show weakness, they often hold up better than your average ticker off the street.

Again, they’re not foolproof — no strategy is — but they give us an edge.

And remember, we’re not just buying call options and hoping for the best. Because each part of our strategy is built to raise the odds in our favor.

Picking the right stocks ups our odds of having the stock move in the right direction.

But it’s also about how you trade it: Because even with these 7 out of 8 picks generally moving in our favor over the long run, straight call options could have burned you.

But think about how these would have worked out if you had used covered calls… lowering your cost basis and then watching the stock bounce back up to new highs.

Or maybe with a credit spread that let you collect income and only stay exposed for 3 days at a time.

Stacking the odds in our favor, that’s the name of the game.

And with seven out of eight stocks moving in our favor? I’ll take those odds any day.

By the way, let me be clear: If you did not already trade these stocks back in August when I first highlighted them, I’m not suggesting you get into them now.

As we talked about, several of them have already started to show some weakness.

So instead of trading these, use the process I’ve shown you before to go out and find a new set of stocks with a nice, strong bullish trend.