Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
In last week’s newsletter, we discussed the continued bearish start to the year. This week the main indices have been broadly flat between the start of the week to the time of writing, but within the week there has been an almighty battle going on between the bulls and bears, resulting in wild intraday swings in price.
All investors and traders will understand the notions of buying and selling. But a surprising few understand the importance of the third option, standing aside.
As savvy and educated traders, our education programme dispels the notion (amongst others) of the need to always be in the market. Concepts such as capital protection and understanding broad market conditions are fundamental lessons we teach our Phoenix community.
Our position remains that the bull market, which commenced in 2008, remains intact, but we are currently standing aside until a clear direction is formed in the main indices.
At Sublime Trading, we have a clear trading plan that governs our approach. This is the value of our education programme, where we teach members the right techniques to manage in all market conditions.
Let’s get into this week’s newsletter!
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Here are how the best-performing UK & US stocks, as picked out by our scanning process, have
performed this week.
For a glossary of terms click here.
OUTPERFORMING STOCKS COVERED THIS WEEK
UK Stocks
US Stocks
FTSE 100
On the monthly time frame, the strength displayed in December has continued into January. December closed with a 4.6% gain and January’s bullishness has already resulted in a 2.3% gain to date. Price has now broken out of last year’s range and the next major area of resistance is the monthly pivot level at 7727.
On the weekly time frame, the Sublime trend filter is green. Price is trading above the 50 and 200 SMA. This week is displaying another indecision candle, with a very long wick below the candle body.
On the daily time frame below, price has retreated to the 50 SMA where it found support. Price has subsequently bounced and is currently trading above the 20, 50 and 200 SMA. The Sublime trend filter has switched back to green from grey. Our overall bias remains bullish, and we continue to look for stocks outperforming the Index.
UK STOCKS
3I Infrastructure – 3IN
A stock that originally floated March 2007, price lacked any clear direction until October 2014; price then formed a strong trend until the pandemic in March 2020. On the monthly time frame, price has been bullish in recent months, rising strongly since October last year, however, January has shown weakness with a 6.4% decline to date.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. In the first week of January price displayed a strong reversal candle, and since then price has weakened.
On the daily time frame below, the Sublime trend filter is red, with price breaking down below the 20 and 50 SMA, but it remains above the 200 SMA. As mentioned, in August price created a fake breakout, and subsequently retreated to the 200 SMA. Since then, price has been in an uptrend, using the 20 SMA as support. A continuation pattern above the current level could offer Phoenix members an opportunity in a stock that has a history of strong trends. The next level of resistance is the £4 round number.
Big Yellow Group - BYG
This stock has a history of trends, however, trends haven’t been the most linear when compared to high-quality trending stocks. On the monthly time frame, price suffered a pullback in September, but strength returned between October to December, with total gains of 24%. Price in January has pulled back by 12.9% to date.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, as mentioned, weakness in price has continued with price now trading at the 200 SMA. The Sublime trend filter remains red. This is a stock to watch, but not one that is high on our watchlist, given its history of performance. We will share any signals with our Phoenix members.
Safestore Holdings - SAFE
A stock with a long-term trend dating back to January 2014. More recently, since price broke above a key pivot level at £8.87 in May last year, price has gained 37%. Price in January has pulled back, with a decline of 12.4% to date.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week price weakened to a pivot level at £12.13.
On the daily time frame below, the Sublime trend filter this week switched to red from grey, indicating further weakness. Price is below the 20 SMA and at the 50 SMA, and this week the 20 SMA crossed below the 50 SMA. Price remains above the 200 SMA. We will continue to monitor this stock and share updates with our Phoenix community, should strength return.
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S&P 500
The year has started with weakness in the S&P 500: January is displaying a decline to date of 8.8%. As mentioned in the opening statement of the newsletter, January is often a weak month for the S&P 500, particularly following strength into the end of the previous calendar year.
On the weekly time frame, price continues to trade above the 200 SMA, but price has weakened to the 50 SMA. This week price is displaying a large indecision candle.
On the daily time frame below, price made a new all-time high at 4820 on 4 January, before price retreated to the 50 SMA. Price has since weakened further to close below all moving averages – the 20, 50 and 200 SMA. As a result, the Sublime trend filter is red. As stated in our initial commentary, we will wait to see if this is a short-term drop in price or a more sustained period of weakness.
US STOCKS
Apple - AAPL
Apple is one of the most popular stocks in the NASDAQ. It has a history of impulsive trends but does suffer periods of pullback and consolidation. On the monthly time frame, price was bullish following the pandemic where price moved from $60 to $130. However, since then the trend has been less linear. In November price broke out to create an all-time high, however, since then price has weakened with a decline in January of 10.3%.
On the weekly time frame below, price is in a long-term uptrend with price trading above both the 50 and 200 SMA, and the Sublime trend filter remains green.
On the daily time frame below, price has retreated below both the 20 and 50 SMA. The Sublime trend filter is red. With earnings this week, we will wait for price to dictate our next move. A continuation pattern above the current all-time high could provide further opportunities before the $200 round number, the next area of resistance.
AmerisourceBergen - ABC
This stock has an interesting mix of strong trends and long periods of consolidation. Price showed strength in a trend from January 2013 to May 2015. However, since then price action has been mixed, despite a recent all-time high. December was the first month in several years which displayed a bullish breakout bar, culminating in a 14.8% gain. That momentum has continued into January with a further 1.4% gain to date. Price created a new all-time high on 11 January at $137.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, the Sublime trend filter is green, with price trading above the 20, 50 and 200 SMA. Price recently broke out above a pivot zone at $129 – $130, before retesting the level. The next area of major resistance is the $200 round number. We will monitor this stock to assess whether a linear trend can form, and we will update our Phoenix community accordingly.
Arthur J. Gallagher - AJG
This is a stock that has a history of long term trends. Price created an all-time high in December at $171, however, like most stocks, price has displayed weakness in January with a 12% decline to date.
On the weekly time frame, price continues to trade above 200 SMA. The Sublime trend filter switched from green to grey. This week, price weakened to the 50 SMA.
On the daily time frame below, this week price has weakened to trade below the 200 SMA. As a result the Sublime trend filter is red. We will monitor this stock to assess whether the long term trend will resume. We will update our Phoenix members accordingly.
Ameriprise – AMP
Price was in a strong trend between November 2020 and April last year, gaining some 60%. Price subsequently went into a period of consolidation until October where it broke out, resulting in an all-time high at $332. However, price has subsequently weakened and displayed indecision in December and January.
On the weekly time frame, price continues to trade above the 50 and 200 SMA. The Sublime trend filter remains green.
On the daily time frame below, price is currently trading below the 20 and 50 SMA, but above the 200 SMA. The Sublime trend filter is grey. Price is currently at the $300 round number and we will wait to assess if this level will act as support. Overall, price is in a strong trend and members of our Phoenix community have multiple positions in this asset. The next area of resistance is the $400 round number. We will continue to update our Phoenix community members on further opportunities.
Amphenol - APH
APH has a good history of long-term trends such as between 2013-14 and 2016-17. Between 2018-20, price moved higher but struggled to establish a clear, linear trend. However, since price broke above $70 in July this year, a linear trend has formed. Price has started January with weakness, with a decline to date of 14.2%.
On the weekly time frame, price continues to trade above 200 SMA. The Sublime trend filter switched from green to grey. This week, price weakened to the 50 SMA.
Looking ahead, we wish to see price establish a similar trend to those seen in 2013 and 2016. The next area of resistance is the $100 round number. A break and close above this key level could offer Phoenix members further opportunities in this high performing stock.
Berkshire Hathaway - BRK.B
A stock with a history of trends lasting 1-2 years. We have discussed this stock in recent weeks, along with December’s newsletter – where we noted a potential breakout month. This assessment was correct, and price has subsequently made light work of the $300 round number, to create a new all-time last week at $323.
The Sublime trend filter is green on the weekly timeframe, and price is trending above the 50 and 200 SMA.
The daily time frame below shows an impulsive move since price bounced off the 200 SMA in early December. Price is currently trading above the 50 and 200 SMA, and this week pulled back to the 50 SMA. The Sublime trend filter switches between green and grey. The longer the consolidation, the larger the breakout. With price breaking out from consolidation going back to May last year, we anticipate a strong trend to develop. We will update our Phoenix community on further opportunities in this trending stock.
McDonald’s – MCD
A stock with a mixed history of trends and long periods of consolidation. Price created an all-time high on 4 January at $271, but has subsequently weakened – with a decline in January of 7.2%.
On the weekly timeframe, price is above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily timeframe below, price is below the 20 and 50 SMA, but above the 200 SMA. The Sublime trend filter is red. With earnings with week, we will await price action to dictate our next move. The next area of resistance is the all-time high previously mentioned. Whilst to the downside there is support at 200 SMA.We will monitor this stock and update our Phoenix community accordingly.
This week the markets have shown signs of consolidating. However, as mentioned last week, one week or even one month does not constitute a broad market reversal, and we will wait upon price action. We will continue to monitor our positions, and act according to our trading plan.
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Keep it simple. Keep it Sublime.
The ST Team
