Welcome to our weekly newsletter where we provide an overview of the main US and UK indices, along with analyses of selected assets that are outperforming the market.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
The S&P 500 closed the week at 5347, registering a weekly decline of 2.1%, following last week’s 2.0% decline. While July ended with a monthly gain of 1.1%, August has seen a decline of 3.2% to date. As price has closed below both the daily 20 and 50 SMAs, the next support levels to watch are the pivot high from March 28 at 5265, followed by the daily 200 SMA currently at 5008 and the 5000 round number.
While major indices like the S&P 500 provide a broad market direction, they don’t tell the full story. We continue to see individual stocks perform well, such as MCK, UNH, KO, GDDY, and MMC – all of which we have analysed in this newsletter over recent months.
Year to date, the S&P 500 has gained an impressive 12%. Despite this week’s weakness, the bullish momentum in equity markets remains strong, with the S&P 500 surging 31% since the October 2023 low and 54% since the October 2022 low.
The Nasdaq 100 underperformed with a weekly decline of 3.1%, and the Dow Jones Index declined by 2.5%.
The FTSE 100, the UK’s premier index, declined by 1.3% over the week, closing at 8174. After breaking out above its all-time high in April, the price has now returned to a range between 8100 and 8300.
PERFORMANCE REVIEW
Arthur J. Gallagher & Co – AJG
Arthur J. Gallagher & Co. (ticker: AJG) is an American global insurance brokerage and risk management services firm headquartered in Chicago, Illinois. The firm was established in 1927 and is one of the largest insurance brokers in the world.
Sublime Trading’s breakout strategy first entered AJG in April 2023 after the stock broke out above 2022’s high and the $200 round number. Following the initial entry, price pulled back to a key pivot level, before resuming the trend. Since then price has been bullish, gaining over 38%. This strategy has capitalised on the trend by compounding multiple times, whilst maintaining only 2% portfolio risk. The moving averages are aligned on both the weekly and daily timeframes, and price making a series of higher highs and higher lows. The next area of potential resistance is the $300 round number. Looking ahead, we can anticipate the trend to continue, and will let price dictate our next move.
The total performance to date is a 1398% Return On Investment and 8% Return On Capital, applying a full portfolio risk of 28%.
AJG is an excellent example of how a stock can form a bullish trend following a breakout from a key level. The total amount of time required to set up and manage this trade has been less than 10 hours over 17 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
CBOE Global Markets – CBOE
CBOE Global Markets (ticker: CBOE) is an American company that owns the Chicago Board Options Exchange and the stock exchange operator BATS Global Markets. Founded in 1973 by the Chicago Board of Trade and member owned for several decades, on March 11, 2010 the Chicago Board Options Exchange (CBOE) filed paperwork to launch an initial public offering and began trading on the NASDAQ stock exchange on June 15, 2010. In 2022 the CBOE had revenue of $3.96 billion and 1543 employees.
CBOE is a relatively new stock, floating in 2010. Between December 2012 and January 2018 price was in a strong trend, gaining 293%. Price then entered a long period of consolidation. However in August last year price broke out and has subsequently gained over 38%. In February price failed at the $200 round number. Price is reapproaching that level with bullish momentum, including gains in July and August of 7.9% and 5.6% respectively.
On the weekly time frame, price is in a strong uptrend. Price is trading above both the 50 and 200 SMAs, and the Sublime trend filter is green. Whilst on the daily time frame, price remains above all moving averages and the Sublime trend filter is also green.
CBOE has a history of forming a trend following a breakout from a key pivot level – this is a vital part of stock selection. A continuation pattern above the current all-time high and $200 round number could offer our Phoenix community members an opportunity in a stock with a history of long-term trends.
Looking Ahead
Despite this week’s performance, the overall strength in U.S. equity markets remains intact—a single week does not constitute a trend reversal. Consequently, we are maintaining all positions in U.S. stocks, which are benefiting significantly from this momentum. As always, we will let price action guide our next move.
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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