I wanted to do this update to share with you exactly what would have happened had you followed everything I said in last Friday’s video.
One of the important elements to look for when a stock is making a 52-week high is that it closes very close to its highs for the day. An example of this would be Home Depot, which closed very close to its highs last Friday. That's the type of stock you should be looking for to go home long over the weekend.
Of the 12 stocks that I showcased last Friday, only three made the cut and matched that criteria and they are, Alphabet Inc., Home Depot and the Goodyear Tire & Rubber Company.
Let's now look at those stocks individually and how they closed last Friday and opened today.
Alphabet Inc. (NASDAQ:GOOG) - Closed 11/20 at $756.55. Opened today at $750.80. This produced a loss of $5.75 a share.
The Home Depot Inc. (NYSE:HD) - Closed 11/20 at $130.08. Opened today at $132.05. This produced a gain of $1.95 a share.
The Goodyear Tire & Rubber Company (NASDAQ:GT) - Closed 11/20 at $34.24. Opened today at $34.25. This produced a gain of $0.01 a share.
Now imagine you would've invested $10,000 in each of these stocks. You would have purchased 13 shares of Alphabet Inc. (NASDAQ:GOOG) which would've produced a loss of $74.75. You would have purchased 76 shares of The Home Depot Inc. (NYSE:HD) which produced a profit of $148.20 and finally you would have purchased 292 shares of The Goodyear Tire & Rubber Company (NASDAQ:GT) which produced the gain of $2.92.
With only 3 of the 12 markets matching the criteria I set that were making new 52-week highs and investing the same amount of money in each stock, you came out with a small gain of $76.37. That’s nothing to write home about, but it didn’t put you in the minus column either.
The key is to follow the rules, you want to buy a market that is closing at or close to its highs for the day, not a market that just made a new high and closed lower – that doesn't cut it, nor does it meet the criteria I have set.
I hope this helps clear up any misunderstandings you might have had about the concept of trading the new 52 week highs on a Friday rules.
Every success in the future using these rules and please feel free to report back and let members know how it is working for you.
Stay focused and disciplined.
Every success with MarketClub,