Welcome to our weekly newsletter where we provide an overview of the main US and UK indices, a specifically selected outperforming asset with deep analysis. Finally, an analysis of an asset in our portfolio, including a discussion on the returns the asset generates for our Phoenix members.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
This week the US indices continued the strong start to 2023. On the monthly time frame, the S&P 500 has gained 5.8%. On the weekly time frame, price has now closed above the 50 SMA. Whilst on the daily time frame, price remains above all moving averages. Notably, the moving averages have all converged. A continuation of the recent bullishness will see the 20 and 50 SMA move above the 200 SMA, a further sign of strength. Our position remains unchanged; we continue to look for high-performing stock in high-performing sectors.
During the week the Nasdaq 100 had a strong gain of 4.7%. The Nasdaq has now closed above the daily 200 SMA, however, the moving averages are not fully aligned, with the 20 and 50 SMA below the 200 SMA. The Dow Jones gained 1.8% during the week.
This week the FTSE 100, the UK index, had a muted week being flat. To date, January has gained 4.2%.
PERFORMANCE REVIEW
Ameriprise Financial - AMP
Ameriprise is a stock with a history of trends over the past 10 years. These trends, such as 2013 and 2020 have been linear and predictable.
We first entered AMP in December 2020 and have compounded on multiple occasions. We last wrote about this stock in October last year when the stock was priced at $300, generating a return on our investment of 682%. Since then the stock has moved higher to break out above an all-time high.
The total performance to date is 968% Return On Investment and 19% Return On Capital, applying a total portfolio risk of 2%.
This stock is a good example of a trending stock in a volatile market. The total amount of time required to set up and manage this trade has been less than four hours over thirteen months – 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 approach enables busy professionals the freedom to pursue other interests and avoid hours each day in front of a trading screen.
OUTPERFORMING ASSET FOR THE WATCHLIST
Caterpillar - CAT
Caterpillar Inc. is an American Fortune 500 corporation and the world’s largest construction-equipment manufacturer. Caterpillar traces its origins to the 1925 merger of the Holt Manufacturing Company and the C. L. Best Tractor Company, creating a new entity, California-based Caterpillar Tractor Company. In 2018, Caterpillar was ranked number 65 on the Fortune 500 list and number 238 on the Global Fortune 500 list. Caterpillar stock is a component of the Dow Jones Industrial Average.
CAT is a stock that has a history of trends, such as in 2016-2018 and 2020-21. Throughout the second half of 2021 and 2022, the stock was in a large range. However, the momentum displayed since October 2022 has continued, resulting in the stock this month breaking out to all-time highs. In January the stock gained 10.4% with an all-time high of $266.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. 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. We last wrote about this stock a couple of weeks ago. On 9th January price broke out to create a new all-time high. Since then price has pulled back to the 20 SMA, found support and moved higher – a bull flag pattern.
Looking ahead, the next area of resistance is the $300 round number. Price is forming a linear trend and could be headed for another extended trend, which could present opportunities for our Phoenix community members in a stock we have traded for excellent returns in the past.
Looking Ahead
Last week’s momentum continued this week, resulting in a strong start to 2023. Whilst we remain vigilant, there are early signs our patience throughout 2022 could be rewarded with another healthy bull run in equities. We continue to share ideas with our Phoenix community for excellent returns.
Keep it simple. Keep it Sublime.
The ST Team
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