Having a tough time making progress in your portfolio? Some of the biggest market-cap names, like Google stock, made the Nasdaq composite look stronger on the surface. Underneath, growth of yesteryear has struggled while cyclicals and commodities are in favor. Plus we’ve been in earnings season, which has tied our hands at times for swing trading. It hasn’t been easy.
Swing Trading Example: Google Stock
Alphabet (GOOGL), the parent company of Google, says a lot about the current market. Since its heyday more than a decade ago, Google stock has tended to stay in line with the S&P 500. But in the last year, it’s been outperforming and has been on SwingTrader a few times.
Not that they have all worked. A swing trading attempt in mid-March (1) quickly fizzled and we exited with a small loss (2). That’s in line with our strategy of cutting losses quickly. It seemed like a good move as the Nasdaq composite was struggling to get above its 50-day moving average line and Google stock ended up continuing to base.
Fast forward a couple weeks to March 31 and the Nasdaq composite flashed a follow-through day. We took the opportunity to increase exposure and Google stock joined SwingTrader again (3). Especially on follow-through days, relative strength lines near new highs are a great guide as to which stocks are worthy of the most attention.
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Google stock moved strongly from there and we took our first third profit the next day (4). With Alphabet leaping 4% the following day (5) we were adjusting our sights higher but ultimately took our second profit a couple days later (6).
Strong Nasdaq Propelled By FANGs
The strength in the Nasdaq composite back to its February highs was largely driven by the FANG stocks, which include Google stock. Add in Microsoft (MSFT) and Apple (AAPL) and those accounted for a large part of the Nasdaq’s move. Compare that to the ARK Innovation ETF (ARKK) and you can see that it wasn’t the highfliers of last year driving the index higher.
What made Google stock an easy hold was that it followed its 10-day line with just one close below it on the way up (7). But eventually we exited (8) before its Q1 report, since as a rule we don’t hold through earnings. However, we did note in our alert that it could be held as a position trade. That was the decision made by Leaderboard, which also holds Google stock.
A strong earnings beat by Alphabet led to a gap up the next day (9). Sure, we left some money on the table. But Google stock pulled back and found support at its 21-day moving average line during the next few days (10) and undercut our exit. Even better, it was a sound setup and got added back on SwingTrader Friday for another potential winning trade.
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