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, gaining 2.4%, and in-turn closing at its highest level since March 2022. The strength in the S&P 500 is demonstrated by an increasing number of breakouts – this week there are 89 versus 86 last week. The S&P 500 is now 29% above the lows of October 2022. On a sector basis, the S&P 500 comprises 11 sectors, and all sectors have breakouts, further strengthening the bull case.
On the weekly time frame, the S&P 500 remains above both the 50 and 200 SMA (Simple Moving Average). The moving averages are aligned, indicating a consistent trend. Our proprietary tool, the Sublime trend filter, continues to present a green signal – for the 13th consecutive week – further reinforcing the strength of the current market.
The FTSE 100, the UK’s premier index, also had a strong week with a gain of 2.5%. Price has bounced off the low from 20 March 2022. Price remains below the 50 SMA, but above the 200 SMA.
OUTPERFORMING ASSET FOR THE WATCHLIST
Cadence Design Systems Inc. - CDNS
CDNS: A Prominent Long-Term Trend and New All-time High
Cadence Design Systems, Inc. (ticker: CDNS) is an American multinational computational software company, founded in 1988 by the merger of SDA Systems and ECAD, Inc. The company develops software, hardware and intellectual properties (IP) used to design chips, systems and printed circuit boards, as well as IP covering interfaces, memory, analogue, SoC peripherals, data plane processing units, and verification.
CDNS has demonstrated a consistent upward trajectory since 2012, making it an appealing stock for long-term investors. Between December 2021 and February 2023, the stock experienced a period of consolidation. However, in March, the stock broke out of this range and has since maintained a strong bullish momentum, culminating in reaching an all-time high this month.
Closing the week at $241, CDNS exhibited a noteworthy increase of 6.1% over the past week. Since price above last year’s high in March, the stock has been bullish, with a gain to date of 22.8%. CDNS has yielded a remarkable return of 49.7% during 2023.
On the weekly time frame, CDNS continues to trade above the 50 and 200 SMAs, indicating positive market sentiment. Our proprietary tool, the Sublime trend filter, remains green, reinforcing the bullish outlook. Moreover, the alignment of the moving averages further supports this positive sentiment.
Similarly, on the daily time frame, the Sublime trend filter remains green, suggesting a favourable market environment. CDNS is trading above the 20, 50, and 200 SMAs.
Looking ahead, the next notable level of resistance lies at the $300 round number. Should a continuation pattern emerge, our Phoenix community members may find an opportunity in a stock that has yielded profitable trades in the past.
OUTPERFORMING ASSET FOR THE WATCHLIST
McKesson - MCK
FTNT: New Breakout Following 18 Months of Consolidation
Fortinet (ticker: FTNT) is a cybersecurity company with headquarters in Sunnyvale, California. The company develops and sells security solutions like firewalls, endpoint security and intrusion detection systems. Fortinet has offices located all over the world. Brothers Ken Xie and Michael Xie founded Fortinet in 2000. The company went public in November 2009.
FTNT has a history of sustained long-term trends, as displayed throughout 2021. Following a long period of consolidation, FTNT has broken out and could be set up for the next long term trend. This week the stock created an all-time high of $80.
On the weekly timeframe, price continues to trade above the 50 and 200 SMAs. Whilst our proprietary tool, the Sublime trend filter, remains green, reinforcing the bullish outlook.
The daily time frame demonstrates a strong trend is in play. The structure of the trend comprises a series of higher highs and higher lows, with modest pullbacks finding support at the 20 SMA.
As mentioned last week, the pullback from the previous week was short-lived. The bulls are firmly in control, resulting in many 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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