Welcome to our weekly newsletter where we provide an overview of the main US and UK indices, along with analyses of selected stocks that are outperforming the market.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
This week the S&P 500 continued its move higher, to close at 4719, a gain of 2.5%. The S&P 500 is now less than 2% below the all-time high. Whilst the Dow Jones Index created an all-time high, along with the Nasdaq 100. The weekly gain for the S&P 500, its seventh in a row, is itself a record. The index has gained 35% since the October 2022 lows.
Regular readers of this newsletter will notice we never mention news topics, economic events, nor the US Federal Reserve. We base our trading strategy on price action, and let the charts dictate our approach. This is why we haven’t fallen into the common trap of going against the trend, nor top calling.
Our long term position, which we have repeatedly stated in this newsletter, is that the equity markets are in a bull trend, which commenced in 2009. Our position has proved correct, despite a series of pullbacks. Our deployment of patience and discipline during these periods bears fruit once the trends returns, as we are witnessing in the equities markets.
On the weekly time frame, the S&P 500 is trading above both the 50 and 200 SMAs (Simple Moving Average). Price is continuing the series of higher highs and higher lows, which commenced in October 2022. Whilst on the daily time frame, price is also trading above the key moving averages, the 20, 50 and 200 SMAs, and the moving averages are all aligned and diverging – a key sign of bullish momentum.
Given price is above all key moving averages mentioned above, we are actively seeking new positions from our watchlist.
We continue to see individual stocks perform well. Our portfolio currently compromises 22 US stocks and 1 currency. We have compounded a number of these assets, in turn, delivering excellent profit for our Phoenix community members.
The FTSE 100, the UK’s premier index, gained 0.3%. Price remains range bound between 7200 and 7700. On the weekly time frame, price remains marginally below the weekly 50 SMA, but remains above the weekly 200 SMA. Whilst on the daily time frame price is trading above the 20 and 50 SMA, but below the 200 SMA. Should strength return, the next major area of potential resistance is the pivot high from 17 April at 7936. The all-time high is 8047. We continue to monitor this index, waiting for confirmation of direction.
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.
Our strategy initially entered AMP in December 2020. Further positions have been taken as price has moved in our favour. November and December have been particularly strong months with gains of 12.4% and 6.9% respectively, resulting in an all-time high of $380 this week.
The total performance to date is a 1265% Return On Investment, and 25% Return On Capital, applying a full 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 six hours over three 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 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
Ametek Inc. - AME
AMETEK, Inc. (ticker: AME) is an American multinational conglomerate and global designer and manufacturer of electronic instruments and electromechanical devices with headquarters in the United States and over 220 sites worldwide. The company was founded in 1930. AMETEK has been ranked as high as 402 on the Fortune 500. The firm has also consistently been on the Fortune 1000 rankings list as well as the Fortune Global 2000.
AME is a stock that has demonstrated an impressive long-term growth trajectory since March 2004, with gains surpassing 2000%! Furthermore, its performance is demonstrated by several bullish periods, such as 2011-13, 2017-19, and 2020-21.
AME closed the week at $163. The stock has been particularly bullish in November and December with gains of 10% and 5% respectively.
On the weekly time frame, AME continues to display positive indications. The stock remains above both the 50 and 200 SMAs. Our proprietary tool, the Sublime trend filter, maintains a green signal, suggesting a favourable environment for investors. The alignment of the moving averages further reinforces the positive outlook. Notably, following a pullback to the 200 SMA in June 2022, AME has rebounded strongly, with an impressive gain of 54%.
On the daily time frame, similar optimistic signs emerge. The Sublime trend filter also remains green, emphasising the continued positive market sentiment. Furthermore, AME is trading above the 20, 50, and 200 SMAs. The alignment of the moving averages corroborates the stock’s positive momentum.
Looking ahead, it is important to identify key levels of potential resistance. For AME, the next notable milestone is the $200 round number. If the stock manages to maintain a continuation pattern above its all-time high, our analysis suggests that a long-term trend may emerge.
Looking Ahead
The strength in equities observed in November has continued into the first week of December. The patience we applied during the pullback in September and October is proving to be the correct decision, as the long term trend has resumed in full. As long term inventors, patience is a key weapon in our arsenal. Our position is the bulls remain in control, resulting in opportunities for savvy investors, such as those in our Phoenix community.
At Sublime, our unwavering commitment lies in conducting thorough analysis based on objective data and factual evidence presented in the charts. By adopting this approach, we aim to provide valuable guidance to our esteemed Phoenix community, collectively exploring opportunities that hold the potential for long-term, profitable trades.
Keep it simple. Keep it Sublime.
The ST Team
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