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
As we noted last week, the US indices have continued to exhibit strength despite concerns over a potential recession, high inflation, and interest rates. While we remain vigilant, we are actively sharing ideas with our Phoenix community to identify opportunities for excellent returns.
The S&P 500 has maintained its bullish trend in 2023, with a gain of 7.4% to date. In March, the index rose by 3.7%, while in April, as of April 21st, it has increased by a modest 0.5%. As trend traders, we assess the long-term performance of assets and anticipate periods of muted activity and acceptable drawdowns.
The weekly time frame for the S&P 500 is showing bullish tendencies, with the index trading well above both its weekly 50 and 200 SMA. The moving averages are aligned positively, and the weekly Sublime trend filter is green, indicating a bullish trend.
Similarly, the daily time frame for the S&P 500 is exhibiting a bullish trend, with the index trading above its daily 20, 50, and 200 SMA. All three SMAs are aligned positively, and the daily Sublime trend filter is green, indicating a bullish trend.
Although we do not typically trade news events, we advise our members to stay informed about upcoming events that could potentially impact the market, such as Q1 earnings reports from major corporations and the Federal Reserve’s monetary policy meetings and statements. Our team is closely monitoring the major indices and will provide timely updates to our Phoenix community as needed.
PERFORMANCE REVIEW
AmerisourceBergen Corporation - ABC
AmerisourceBergen Corporation (ABC) is a significant player in the drug wholesale industry, providing comprehensive drug distribution and consulting services for medical business operations and patient care. Following the merger of Bergen Brunswig and AmeriSource in 2001, the company has continued to expand its reach by distributing a wide range of brand name and generic pharmaceuticals, over-the-counter healthcare products, and home healthcare supplies and equipment to healthcare providers across the United States. With a strong foothold in the market, AmerisourceBergen is responsible for about 20% of all pharmaceuticals sold and distributed in the US.
We first entered ABC in February 2022, compounding on multiple occasions. We last wrote about this stock in December. Since then the stock has been flat and in a period of consolidation – a good performance compared to the overall market. Commencing in March, the stock has been bullish. On both the weekly and daily timeframes the moving averages are aligned, and we await a breakout above the all-time high of $175. The next area of resistance is the $200 round number.
The total performance to date is a 483% Return On Investment and 10% 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 five hours over ten months – this is the benefit of trend trading; using higher time frames such as monthly and weekly charts to avoid 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
The Hershey Company - HSY
The Hershey Company (HSY), a leading multinational chocolate manufacturer, has made a name for itself with its popular Hershey’s chocolate, which is enjoyed across the United States and in over 60 countries worldwide.
For traders, HSY has a track record of strong trends, including 2011-13, 2019, and most recently 2021-22. Despite a 14% decline in the S&P since December 2021, HSY has gained an impressive 36% over the same period, including gaining 17% since February. The price is at a new all-time high of $261.
On both the weekly and daily time frames, price remains above the 50 and 200 SMA, and the Sublime trend filter is green. We noted in March that price was utilising the pivot level at $243 as support and breaking out to start a new trend; which has now materialised. We anticipate the new trend could run for 12-18 months. This will present an opportunity for our Phoenix community members to invest in this resilient stock in an otherwise bearish and volatile market.
Looking ahead, the next area of resistance is at the $300 round number. Traders should keep a close eye on HSY’s performance in the coming weeks and months.
Looking Ahead
This week the US indices have again displayed resilience, maintaining the recovery from the recent weakness caused by the US banking situation. With strong rebounds in the leading US indices, the moving averages are now aligned across all indices on the main time frames, signalling potential opportunities for investors.
As we continue to monitor market conditions closely, we are actively sharing ideas with our Phoenix community to identify opportunities that offer excellent returns. Despite ongoing volatility, we remain optimistic and are committed to staying vigilant in our pursuit of profitable trades.
Keep it simple. Keep it Sublime.
The ST Team
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