Welcome to another edition of our weekly newsletter where we provide an overview of the main US and UK indices, a selection of outperforming assets with deep analysis, and finally, an analysis of an asset we have in our portfolio, including a discussion on the returns the asset is generating for our Phoenix members.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
Given the volume of news events last week, along with the earnings season, many market commentators were expecting significant volatility in the US indices. However, it turned out to be a muted week, with the S&P 500 in a range of just 2% for the week. One of our core principles is to trade price action and not news, or the comments of self-proclaimed experts. The next step will be to monitor price action throughout August – as volumes can be thinner due to holidays in the US, UK and Europe, price action can be volatile. On the daily timeframe the pattern of higher highs and higher lows remains intact; an indicator of momentum. With the earnings season continuing, we need to remain aware of volatility. Our position is we continue to seek opportunities but remain vigilant.
This week the FTSE 100, the UK index, also had a muted week with a range of just 1.5%. On the daily time frame, price is trading above all moving averages; 20, 50 and 200 SMA. Importantly, the 20 SMA has crossed above the 50 SMA, a sign of momentum building; both moving averages are trading below the 200 SMA and we need to see alignment before having complete confidence in price action. Again, we are actively looking for opportunities but remain vigilant.
OUTPERFORMING ASSET FOR THE WATCHLIST
AZPN - Aspen Technologies
Aspen Technology, Inc., known as AspenTech, is a provider of software and services for the process industries headquartered in Bedford, Massachusetts. AspenTech has 35 offices around the world, on all continents (excluding Antarctica). Founded in 1981, AspenTech was born out of a joint research project between the Massachusetts Institute of Technology (MIT) and the US Department of Energy—called the Advanced System for Process Engineering (ASPEN) Project.
AZPN is a stock with a history of linear trends dating back to 2011. These trends are evident on the monthly time frame during 2012-13 and 2016-18, Price broke above last year’s high in May and has since moved higher, resulting in an all-time high this month at $214.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Price action has been very strong over the past two weeks, and made light work of the $200 round number.
On the daily time frame, the Sublime trend filter is also green. Price is currently trading above all moving averages, however, the 20 SMA is below the 50 SMA and we prefer to see the moving averages aligned.
AZPN has earnings this week which we will monitor. A continuation pattern above the all-time high and the formation of a linear trend could present opportunities for our Phoenix community members in a stock that has delivered a good profit in the past.
PERFORMANCE REVIEW
CHFJPY
We last wrote about CHFJPY in our newsletter on 27th June this year. CHFJPY is an asset with a history of trends. Trading forex assets can be complex, but with the proper knowledge and support, such as that which our Phoenix community receive, profitable investing in forex assets is achievable.
We first entered CHFJPY in October 2021 and have since compounded. We monitored the asset through the pullback in May which has to date proven to be the correct approach. This asset made a higher high and higher low between 8 – 15 June, and this week made an all-time high at 141.89. June’s candle has been particularly bullish with a gain of 6.0%. July’s candle displayed indecision, which was not unexpected following June’s bullish move. To date, August has displayed indecision, and we will monitor this asset. The return to date on total portfolio value exceeds 5% using a real risk of just 2%.
The total amount of time required to set up and manage this trade has been less than one hour over ten months – 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.
Looking Ahead
This week the US and UK indices have been muted, which is not unexpected given the recent volatility. We now need to assess whether recent performance will hold and whether strength will continue. If so, the patience we have displayed over recent months will be rewarded. We continue to actively monitor all markets, scanning for opportunities such as the stocks described today, along with the JPY forex pairs and Dollar strength, and sharing these with our Phoenix community for excellent returns.
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Keep it simple. Keep it Sublime.
The ST Team
