Weekly Pick Strategy: Monday to Friday
The concept of a weekly stock strategy can be highly effective for traders looking to capitalize on short-term market movements without the complexity of day trading or the long-term risk of holding positions for months. This strategy involves selecting a single stock every Monday morning and holding it through the week until Friday’s market close, unless a specific gain threshold of 15% is reached beforehand. If the stock exceeds the 15% target before Friday, it is sold immediately to lock in profits. Otherwise, the stock is sold at Friday’s market close, regardless of the outcome. Join Above the Green Line today and start growing your portfolio.
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ATGL Pick of the Week Buy:
| Star Rating | Open Date | Symbol | Purchase Price | Stop Loss | Last Price | SCTR | Unrealized Gain/Loss % | ATGL Rule | Comments | ATGL 60 Min | id | Strategy | Position | Description | Sell Date | Sell Price | Net Profit | Realized Gain/Loss % | Industry | Size | color | Chart | Update Date | Status | Daily Change % | Volume | Post Type | # Shares | Amount Invested | Portfolio Weight | Dividend Rate | Current Yield | Current Value | Yield on Cost | Projected Annual Dividends | Total Dividends Received | Pay Back | Profit / Loss | Annualized Profit/Loss |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025-01-13 | AUR | $6.78 | $6.83 | 97 | 0.74% | Buy On Monday Morning, Sell on Friday's Close. | 4473 | Top Weekly Choice | Long | Aurora Inovation Inc. | 2025-01-17 | $6.80 | Tech | Small | https://stockcharts.com/h-sc/ui?s=AUR&p=D&yr=0&mn=6&dy=0&id=p30813991236&a=1877839025 | 2025-01-17 21:07:36 | open | 0.4412 | Trade | 2197 | $14,898 | 100.00% | 0.00 | 0 | $15,006 | 0.00% | $0 | $0 | 0.00% | 0.72% | - |
You can see Weekly Stock Pick Performance results here.
Overview of the Strategy
The core philosophy of this trading approach is grounded in technical analysis and momentum-based stock selection, focusing on finding stocks with strong relative performance and breakout potential. The Above the Green Line (ATGL) Stock Selection Criteria is used to identify stocks that are poised for growth, including factors like high SCTR (StockCharts Technical Rank) ratings, breakouts from the Green Zone, and high trading volume.
Key Criteria for Stock Selection
- SCTR Rating Above 90: The StockCharts Technical Rank (SCTR) is a ranking system used to compare the technical strength of individual stocks. A score above 90 means the stock is performing in the top 10% of the market in terms of price momentum. This ensures that the stock chosen each week is already in a strong uptrend, providing a higher probability of short-term gains.
- Stock Breaking Out of the Green Zone: The Green Zone refers to the technical area where a stock is considered to have significant upside potential, often after a period of consolidation. A breakout from this zone signals a strong upward momentum, giving the stock the possibility to achieve quick gains.
- High Volume: A stock with high trading volume indicates strong market interest and liquidity, which is crucial for entering and exiting trades efficiently. High volume often accompanies breakouts, further confirming the upward trend.
Step-by-Step Process
1. Stock Selection:
Each week, a stock is selected based on the ATGL Stock Selection Criteria. This process typically happens over the weekend, with the stock announcement sent out on Sunday evening or Monday morning. The idea is to give subscribers or followers a clear and actionable pick before the market opens on Monday.
- Research and Analysis: The team or trader uses tools like StockCharts to filter stocks with an SCTR above 90, identifying those breaking out of the Green Zone on high volume. The analysis also involves checking for any fundamental news or events that could affect price movements during the week.
- Announcement: Once a stock is selected, it is announced via email, website, or trading platform, ensuring that everyone involved has the opportunity to act on the selection before the market opens.
2. Monday Morning Purchase:
Once the market opens on Monday morning, the stock is bought at the earliest opportunity. The price at the time of purchase becomes the reference point for tracking the 15% target.
- Position Size: It’s important to determine position sizing based on risk management principles. Traders may use a fixed dollar amount or percentage of their portfolio, ensuring that they do not overexpose themselves to a single stock.
- Entry Point: The exact entry price on Monday morning is recorded as it becomes the basis for calculating the exit points throughout the week.
3. Monitoring the Stock Throughout the Week:
During the trading week, the stock’s price is monitored closely to see if it reaches the 15% gain target. If the price rises by 15% or more at any time before Friday’s market close, the stock is immediately sold to lock in profits.
- Daily Check-Ins: Traders may set alerts or manually check the stock’s price each day to ensure they are aware of any significant movement.
- Managing Market Volatility: Since this is a short-term strategy, market volatility can play a role. However, by focusing on technically strong stocks with high momentum and volume, the goal is to reduce the chances of adverse movements.
4. Exit Strategy:
The exit strategy is straightforward:
- 15% Gain Target: If the stock gains 15% or more during the week, sell immediately, regardless of the day.
- Friday Close: If the stock does not reach the 15% target, it is sold at the end of the trading day on Friday. This prevents holding the position over the weekend, reducing exposure to any negative news or market changes during non-trading hours.
Reminder to Members: While we track the TPOW (Top Pick of the Week) performance from Monday open to Friday close for consistency, it’s important to use your judgment when managing trades. For example, the TPOW may show strong momentum, being up 5% midday Friday, but could close much lower by the end of the session. If you’re in a position to lock in a solid gain during the week, don’t hesitate to take it. The key is to monitor the stock closely and adapt to its movement. Protecting profits is always a priority in trading.
Advantages of the Strategy
1. Clear and Simple Approach:
One of the biggest advantages of this strategy is its simplicity. By focusing on just one stock per week, it allows traders to devote time and energy to understanding the stock’s technical setup and market conditions. The clear rules for entry and exit eliminate emotional trading decisions, which can often lead to poor results.
2. Momentum-Based Gains:
The strategy targets stocks with high momentum, which increases the likelihood of achieving short-term gains. Since the SCTR rating ensures that only the top-performing stocks are selected, the probability of upward movement is enhanced.
3. Risk Management:
The strategy inherently includes risk management principles:
- By selling at Friday’s close, traders avoid holding positions over the weekend when the markets are closed, reducing the risk of unexpected news affecting stock prices.
- The 15% target ensures that traders lock in profits without becoming overly greedy, while the Friday exit provides a consistent end point each week.
4. High Liquidity:
By focusing on stocks with high volume, this strategy ensures liquidity. This is essential for traders to enter and exit positions without significant slippage.
Challenges and Considerations
1. Market Conditions:
This strategy performs best in bullish or neutral markets where momentum and breakouts are common. In bearish markets or during periods of high volatility, it may be more challenging to find stocks that meet the ATGL criteria and achieve the 15% target.
2. Over-reliance on Technical Indicators:
While technical analysis forms the backbone of this strategy, it’s important not to ignore fundamental analysis. External factors like earnings reports, macroeconomic events, or industry news can significantly affect stock prices, even if the technical indicators are favorable.
3. Patience and Discipline:
Traders must be patient and disciplined, sticking to the rules of the strategy. It can be tempting to deviate from the plan, especially if a stock doesn’t move much early in the week. However, the consistency of the strategy is what leads to long-term success.
Tools to Enhance the Strategy
- StockCharts (for SCTR ratings and technical indicators): StockCharts provides real-time data on SCTR ratings, allowing traders to filter and select stocks that meet the above 90 threshold. It also offers charting tools to identify breakouts from the Green Zone.
- Trading Platforms with Alerts: Platforms like ThinkorSwim, Interactive Brokers, or TradeStation allow you to set price alerts so that you’re notified when a stock hits your target price, helping you to react quickly.
- Risk Management Software: Using tools to automate risk management can help prevent overexposure. Programs that automatically calculate position size and provide stop-loss or take-profit functionality ensure that risk is kept under control.
Accumulation of Weekly Gains
While the goal is to capture up to 15% gains each week, the average return may vary depending on market conditions and individual stock performance. The strategy aims to secure consistent, smaller gains over time, typically between 2-3% per week.
1. Compounding Weekly Gains
The real power of this strategy lies in the compounding effect of consistent weekly returns. If a trader consistently achieves 2-3% per week, the cumulative effect over the course of a year can be substantial.
Here’s an example:
- Weekly Return of 2.5%: If a trader earns an average of 2.5% per week and reinvests their gains, the total annual return can be calculated using the formula for compound growth:
Using this formula, a 2.5% average weekly return would yield an annualized return of approximately 229%, excluding transaction costs, taxes, and other potential fees. This exponential growth is the result of compounding gains over time.
The graph above shows the total return of an initial investment of $10,000 assuming weekly gains of 2.5%, comparing the effects of compounding vs non-compounding over 52 weeks.
- Compounding (blue line): The investment grows exponentially, as each week’s gain is added to the previous week’s total.
- Non-Compounding (green dashed line): The investment grows linearly, with gains applied only to the initial investment without reinvesting the gains each week.
The compounding approach significantly outperforms the non-compounding approach, illustrating the power of compound interest over time.
2. Consistency Over Big Wins
While hitting a 15% gain each week would be ideal, consistency is more important than large wins. By consistently capturing smaller gains (such as 2-3%), traders can avoid the volatility and risk associated with seeking large, sporadic wins. Over time, this approach smooths out portfolio growth, reducing the emotional strain of trading.
3. Loss Mitigation
Occasionally, the selected stock may underperform or even experience a loss during the week. In such cases, selling at Friday’s close ensures that losses are capped, preventing the possibility of larger losses due to extended holding periods. The focus is on maintaining consistent gains while minimizing downside risk.
4. Diversifying Across Time
The nature of this strategy means that each trade is independent of the others. There is no overlap between trades, which helps spread out risk over time. A bad week’s performance does not affect the following week, allowing the trader to reset and select a new stock with a fresh technical outlook.
Performance Review and Adjustments
As with any trading strategy, it’s crucial to review performance periodically and make adjustments as needed. While this strategy focuses on a systematic approach, external factors such as market volatility, earnings season, and macroeconomic events can influence stock performance.
1. Quarterly or Monthly Performance Reviews
Reviewing performance on a monthly or quarterly basis allows traders to see if the strategy is meeting expectations. If average gains fall below the 2-3% target, adjustments may be necessary, such as refining the stock selection criteria or incorporating more risk management tools.
2. Adapting to Market Conditions
In bull markets, stocks tend to rise more consistently, making it easier to achieve the 15% target. In contrast, during bear markets or periods of high volatility, the strategy may need to adapt by tightening selection criteria or using shorter timeframes for breakouts.
Conclusion
This TOP PICK of the Week stock strategy provides a simple yet effective approach to short-term trading, focusing on one stock per week and employing clear entry and exit rules. By utilizing the ATGL Stock Selection Criteria, traders can consistently pick strong, high-momentum stocks, aiming for 15% gains. Even if the full target isn’t achieved each week, the accumulation of 2-3% weekly gains can lead to substantial growth over the course of a year, especially when compounding is factored in.
With disciplined execution and a focus on consistency, this strategy offers the potential for high returns with manageable risk. It is well-suited for traders who prefer a structured, methodical approach to the market without the intense demands of day trading or long-term investing. See the ATGL Stock Pick of the Week Results.
