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A Large-Cap Name Seemingly Poised to Take Advantage of a Stronger Market

|Includes: Vanguard Growth ETF (VUG)

My systems are telling me that stocks will likely move higher into mid-April, so potentially we've got a few weeks to make some money in an upwardly trending market.



Helping the rally in stocks in April will be what I believe could be a weakening of the U.S. dollar during the month. The reason a weaker dollar might be supportive for the stock market is that U.S. goods and basic materials would in effect be cheaper around the world, which could lead to increased demand for corresponding stocks. This week's pick is a play on that scenario.

Vanguard Growth ETF (NYSE: VUG) is an exchange-traded fund that tracks the overall performance of the MSCI U.S. Prime Growth Index, a benchmark index comprised of a diversified basket of growth stocks of large U.S. companies.



VUG has a composite score of 167 out of 200. Below are some of the technical factors that lend support to VUG:

  • VUG trades in the top third of Zone 3 and trending higher toward Zone 4, the highest 25% of the ETF's three-year trading history. This is a bullish trend.

  • Average daily trading volume has been trending slightly higher during the past couple of months, an indication that investors are beginning to have more interest in this ETF.

  • Both the industry focus (large caps) and the U.S. markets are in bull-mode. This tends to support the likelihood of VUG continuing to trend higher in the near term.
Action to Take: Based on the analysis above, I believe VUG is a good trade to put on now with the following trading parameters:
  • Buy VUG with a limit order at $55.01  (Good for the Week)
  • Set an initial stop loss at $50.09
  • Target price = $61.50


Disclosure: No positions