Hey traders,
This was a headline last week, as markets dumped off:
You see that? Things were so bad that “Crash Fears” were lingering. Everyone was in a panic.
With that kind of market action going on, you’d think that there was no safe place for a trader to hide.
But even through all that, I managed to share with you 8 rock-solid stocks that had been on long-term bullish trends higher and didn’t lose momentum.
Imagine that — even while headlines like the one above were being printed, these stocks held their ground and even charged higher.
Today I want to look at the the charts of those stocks, because it’s important for you to see the pattern we’re looking for.
If you can etch that pattern into your brain — and only trade stocks that look like that — you can dramatically increase your success as a trader.
So let’s get to it.
GoDaddy (GDDY)
The first stock I shared with you was GoDaddy, ticker symbol GDDY. Let’s look at the chart:
This is a picture perfect chart for a couple of reasons:
- Long trend – I’ve told you that I look for stocks in 4-6 month trends. This one goes all the way back to the end of October. That’s more than 9 months long.
- No sudden spikes – Notice how the stock doesn’t suddenly spike up. It’s a strong, consistent upward slope.
- No breakdowns – Notice how the stock price tends to stay above the green 20-day trendline. Very rarely does it ever go below that green trendline. And on the rare occasion when it does, it very quickly gets back above it. That’s a strong, stable trend.
- Strength in a weak market – Look at how it did in April and then go look at a chart of the SPY, DIA and QQQ during that same time. Those three major indexes not only dipped below their 20-day trendlines. They dipped below their mid-term 50-day trendlines.
Yet in April and May, you can barely see GDDY touch the green trend line. That’s a strong stock in strong trend. Always keep an eye out for that, because
Motorola Solutions (MSI)
Next up was MSI:
Back in December, you can see MSI got a little too far above the green trendline and dropped down to the blue 50-day trend line. But it quickly gained strength and got back above the green 20-day.
In April it dropped down again, this time touching the blue 50 day, but again, it quickly regained strength.
Since then, the stock has rarely been below the green trendline.
Colgate-Palmolive (CL)
CL is another stock with a strong, long-term bullish trend:
As with the others, April give this one a little trouble, but it quickly bounced up once it touched the 50-day trendline
And for the most part, it’s been bouncing off the green trendline beautifully since then.
Ventas Inc (VTR)
VTR is a little different:
As you can see, VTR’s trend is nowhere near as long as the first three stocks I shared with you.
It basically started on its trend in May. But since then it has quite literally never been below its 20-day trendline.
The trend is just a bit over 3 months long at this point, but you can just see that strength as it’s not so much bouncing off its 20-day trendline, it’s more like floating above it.
The stock maybe did get a little too far from its green trendline over the last few days, so I might expect a little bit of a pullback. Nothing to be concerned about, especially if you’re trading it using a cashflow strategy.
Independence Realty Trust (IRT)
Here’s IRT’s chart:
IRT really only started its trend in mid-March. Since then it’s rarely been below the green 20-day trendline
It did have a stumble in May, but you see how quickly that recovered? That’s another sign of strength.
Welltower Inc (WELL)
Looking at the chart, WELL isn’t as strong as some of the other stocks we’ve look at:
You can see it’s had two big stumbles — one in January and the other in April.
Since then it’s been above the the green 20-day trendline with rare exception, so while I wouldn’t consider this one perfect, I think it says a lot that it didn’t experience any trouble during last week’s meltdown.
Life Time Group Holdings (LTH)
Here’s the LTH chart:
It wasn’t until early June that LTH started trending. That puts it at just over 2 months trending.
I probably wouldn’t trade this one, but I’d keep it on my list to see if it continues on the same trend: going higher, staying above that green trendline, and remaining strong whenever markets get weak.
Pilgrims Pride Corp (PPC)
PPC is an interesting one:
It has been in a fairly strong trend and even stayed strong during the April market weakness.
But it turned soft in late May and early June.
It recovered fairly quickly, but really it made it onto this list because it didn’t really feel any of the effects of last week’s market drop.
I would consider this one imperfect, but worth a look.
Conclusion
While markets were melting down, these eight stocks stayed strong and not only held their ground, but kept going up.
It’s important to be able to set up your charts with those 3 indicators I use and it’s important to recognize periods of weakness in the market.
Always keep your eye out for strong stocks during weak times. If a stock can charge higher while the market around it is crumbling, just imagine what it can do when the market is pushing higher.
And remember, we don’t trade these directionally. Because directional trades require you to be right.
We trade these as income trades, because that gives us a lot more “wiggle room” to be somewhat wrong, but still win the trade.
Later this week I’ll dive into that and show you how some of these could have worked out as trades.
UPDATE November 13, 2024: Three months later, I checked in on these stocks to show you the power of starting with a strongly trending stock.
Trade well,
Jack Carter
P.S. When markets suddenly dropped last week, a lot of traders were caught with their pants down. That’s why I just recorded this Recession Roadmap presentation to show you want I plan to do to keep targeting income no matter what happens with markets.
