Welcome to our reformatted newsletter, where we provide an overview of the main US and UK indices, a selected asset with deep analysis, and finally, an analysis of an asset we have in our portfolio, including a discussion on the returns the asset is generating for our Phoenix members.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
As mentioned last week, the three US indices – S&P 500, Nasdaq 100, and Dow Jones 30 – all peaked in early January and all have declined throughout 2022 – all reaching technical bear market levels. Whilst all three indices are trading below the daily 200 simple moving average (SMA), May’s monthly candle for all indices is displaying indecision – this could represent a turning point. We will wait to assess May’s monthly closing candle before fully assessing the position.
As mentioned last week, we are not currently considering short positions, as all indices are above the weekly 200 SMA. We should also be mindful that the indices are still trading above the pre-pandemic highs; indicating the strength of the bull run throughout 2020 and 2021. We believe the long term trend, which commenced in 2008, is the dominant market direction.
The FTSE 100, the UK index, has performed significantly better in 2022, with a gain year to date of 1.4%. May’s monthly candle is currently showing a gain of 0.6%, with a large wick below the price.
OUTPERFORMING STOCK FOR THE WATCHLIST
Eli Lilly And Company - LLY
Eli Lilly And Company is a stock which first floated in 1970; it wasn’t until twenty-five years later that a trend emerged, lasting over two years! The stock suffered a low point following the great financial crisis of 2007-8, but since then has been in a long-term trend, gaining some 1200%! Whilst trends historically haven’t been the cleanest, price is currently showing signs of genuine bullishness. In the past three months, the stock has gained over 30% and is trading above last year’s high.
On the weekly time frame, the price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week’s price broke out to an all-time high with a strong, bullish bar. Whilst on the daily time frame, the Sublime trend filter is also green. Price is currently trading above all moving averages, which are all aligned. Importantly, the 20 and 50 SMA are diverging, indicating near term strength. Price is also above the $300 round number which has recently acted as a level of resistance.
Looking ahead, a continuation pattern above the current all-time high could offer our Phoenix community members an opportunity in a very bullish stock. The next area of resistance is the $400 round number.
PERFORMANCE REVIEW
Ameriprise - AMP
Ameriprise is a stock with a history of trends over the past 10 years. These trends, such as in 2013 and 2020 have been linear and predictable.
We first entered AMP in December 2020 and have since compounded on multiple occasions. The return to date on total portfolio value exceeds 3% using a total risk of just 2%. This stock is a good example of the value of using historic price action as a guide to possible future trends.
The total amount of time required to set up and manage this trade has been less than two hours over nearly two years – this is the benefit of trend trading; using higher time frames such as monthly and weekly charts avoids the noise and stress of shorter time frames. This is the value in trend trading for professionals that don’t wish to spend hours each day in front of a trading screen, scalping for small gains whilst risking large amounts of capital.
Looking Ahead
This week the markets have shown signs of strength; we await to see if the weakness experienced throughout 2022 has been exhausted. We continue to actively monitor the markets, scanning for opportunities, and sharing these with our Phoenix community for good returns.
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Keep it simple. Keep it Sublime.
The ST Team
