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 stemmed the decline seen throughout September, with a modest gain of 0.5%. September closed the month with a decline of -4.9%. We have mentioned several times in this newsletter that September is regularly a weak month in the calendar and, as long term investors, we have the patience and awareness to ride out these periods.
This week there are 32 breakouts – we expect this number to increase, should the S&P 500 regain the ground lost in September. On a sector basis, nine of eleven sectors are in a breakout position.
Despite the pullback in the indices, we are seeing individual stocks perform well. Our portfolio currently compromises 12 US stocks and 3 currencies. We have compounded a number of these assets, in turn, delivering excellent profit for our Phoenix community members.
Examining the technicals, on the weekly time frame, the S&P 500 remains above both the 50 and 200 SMAs (Simple Moving Average). The moving averages are aligned, indicating a consistent trend. Last week we discussed the potential for support in the zone around 4200, and this week support was evident as price failed to break through 4220. Whilst on Friday the bulls stepped in resulting in a strong gain of 1.2%.
As mentioned, our view is that price action in September is an expected seasonal activity. We favour a fake breakdown and a reversal to the upside. The S&P 500 weekly and daily trend filters both closed grey (previously red), suggesting the end of last month’s decline. We continue to remain long-term bullish. We will let price dictate our next move.
The FTSE 100, the UK’s premier index, followed up last week’s decline with a further decline of -1.5%. Price is now trading below the weekly 50 SMA. Price is in a large range of consolidation between 7200 and 7700. 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.
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 price broke out and has subsequently gained 16%. Importantly, CBOE has a history of forming a trend following a breakout from a key pivot level – this is a vital part of stock selection.
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. Since price broke above the 50 SMA on 13 March, price has been bullish, gaining 29%. Whilst on the daily time frame, price remains above all moving averages and the Sublime trend filter is also green. Price is in a trend, evidenced by a series of higher highs and higher lows.
A continuation pattern above the current all-time high could offer our Phoenix community members an opportunity in a stock with a history of long-term trends. The next area of potential resistance is the $200 round number.
OUTPERFORMING ASSET FOR THE WATCHLIST
UnitedHealth Group Inc. - UNH
United Health Group Incorporated is an American multinational managed healthcare and insurance company based in Minnetonka, Minnesota. It offers health care products and insurance services. UnitedHealth Group is the world’s eighth-largest company by revenue and second-largest healthcare company behind CVS Health by revenue, and the largest insurance company by net premiums. UnitedHealthcare revenues comprise 80% of the Group’s overall revenue. The company is ranked 8th on the 2021 Fortune Global 500. UnitedHealth Group has a market capitalization of $400.7 billion as of March 31, 2021.
The long-term trend in this stock is impressive, maybe second to Microsoft for long-term linearity. Throughout 2020 to 2022 this stock was in a strong trend. In December price entered a period of consolidation, with price using the previous year’s low at $445 as support. Commencing in September the bulls have stepped in to regain control, resulting in gains of exceeding 10%.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week price was bullish with a gain of 4.1%.
On the daily time frame, the Sublime trend filter is also green. Price is currently trading above all moving averages. On Friday the 20 SMA crossed above the 50 SMA, resulting in full alignment of the moving averages.
Looking ahead, we will monitor the current price action. A continuation pattern above the all-time high at $555, along with the formation of a linear trend could present opportunities for our Phoenix community members.
Looking Ahead
Price action in September closed bearish, however October has started with signs of the bulls re-entering the market. As long term inventors, patience is a key weapon in our arsenal. We are currently applying the necessary patience, and await price to dictate our next move. Despite the recent pullback, 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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