If you had to make a guess about which of the Dow Jones Industrial Average’s 30 stocks is the strongest right now (based on a strong recent breakout), what would your guess be?
Maybe Apple (AAPL)? Microsoft (MSFT)? No – the strongest stock right now may surprise you – it certainly surprised me.
Let’s chart it from the Daily Perspective:
“Stocks which are strong tend to get stronger” – that’s our guiding principle at least.
A lot of what we do at Afraid to Trade in the membership and the open blog is scan for Relative Strength.
We like to highlight strong trending stocks and buy pullbacks (retracements) or breakouts as the trends continue.
Right now, Home Depot (HD) gapped higher and surged from $ 120.00 to $ 135 in seven straight sessions.
Yes, retracements are often easier and less risky than breakout trades, but I highlighted the last three breakouts for Home Depot’s stock (all were successful).
Home Depot is a well-known home improvement retail store that sells various items from building materials, lawn/garden items, and just about anything you can imagine for retail customers and contractors.
It’s a simple concept and the share prices continue to rise in a strong uptrend, especially with the recent breakout.
Here’s the broader perspective from the Weekly Chart:
After a stagnant late 2013 and early 2014, share prices broke impulsively (there’s another breakout opportunity) above the $ 80.00 per share level.
From there, price rallied above $ 115.00 and then traded in a stable rising uptrend through the rest of 2015.
When adding stocks to your portfolio and identifying swing trading candidates, look to strong trending stocks and look to buy strength – either via pullbacks (retracements) or aggressive breakouts.
Stay tuned as we highlight additional strong trending stocks in the Dow and S&P 500 Indexes.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
