Our strategy of the Stock of the Week was added as a permanent component of our service last year in mid-December. Every weekend we select one stock from the best stocks in our fundamental ranking. We make the selection based on a technical analysis of the charts. In doing so, we pay particular attention to an attractive risk-reward ratio, strong arguments against falling prices (bottom formation, support levels or uptrend) and the potential for short-term dynamic upward movements.
The stock is bought on Monday morning and sold again on Friday evening without any other position management requirements. If desired, stop-loss and take-profit levels can of course be added to further improve it, but it is not necessary. The strategy started off strongly right away with Atoss Software, which at 11.2% in one week remains the strongest stock of the week to date.
In June we published the first review and were already far ahead of the market at that point. After the first six months, we could proudly look at a performance of over 40%, while the indices with 15 - 20% couldn't even achieve half of this return.
In the second half of the year we were also able to build on this success, even though we made two poor choices at the end and the stock of the week fell by 5% (Embracer) and 6% (Aspen) respectively in the last weeks of October and November. But there were also two strong picks, each with a good 9% (also Aspen and Fair Isaac) return in one week, and so we were able to end the year with a return of 74%.
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In contrast, the S&P 500 only achieved a return of 29% and the DAX was only able to gain 18% in the same period. The Stock of the Week strategy lost a maximum of 15.6% this year. The Sharpe Ratio is currently at a value of 5.6.
This week our choice is TeamViewer with 6.1% in the green. The second year of the strategy is starting off promisingly.
The reason for the choice: The stock had to accept massive losses last year and was the worst performer at least in the MDAX. Since November, the stock has been working on bottom formation and has developed divergences in the RSI in recent weeks, with lower lows in prices and higher ones in the RSI momentum indicator. In the weak market of the past week, the stock was able to show relative strength on Friday with a significant price surge on volume, thereby sending clear signals that it is ready for a rally.
