Welcome to our reformatted newsletter, where we provide an overview of the main US and UK indices, a selected asset 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
The three main US indices – S&P 500, Nasdaq 100, and Dow Jones 30 – all peaked in early January and all have declined throughout 2022 – all reaching technical bear market levels. This week was particularly significant as the S&P opened and closed in a technical bear market territory. With all three indices trading below the daily 200 simple moving average (SMA), there isn’t any clear identifiable relief in individual assets with 89% of stocks which compose the S&P 500 trading below the 200-day SMA.
This week the FTSE 100, the UK index, also experienced an unusually bearish week compared to recent price action, resulting in a decline in June of 3.8% to date.
Whilst we believe the long-term trend in equities, which commenced in 2008, is the dominant market direction, the value of trend trading in a wide variety of markets is that we seek opportunities beyond equities, such as currencies and DXY (the US dollar basket).
OUTPERFORMING STOCK FOR THE WATCHLIST
US Dollar Basket - DXY
DXY is maintained, and published by ICE (Intercontinental Exchange, Inc.), with the name “U.S. Dollar Index” as a registered trademark. It represents the value of the United States dollar relative to a basket of foreign currencies, including the Euro (EUR), 57.6% weight, Japanese yen (JPY) 13.6% weight, Pound sterling (GBP), 11.9% weight, Canadian dollar (CAD), 9.1% weight, Swedish krona (SEK), 4.2% weight and Swiss franc (CHF) 3.6% weight. The Index goes up when the U.S. dollar gains “strength” (value) when compared to other currencies.
DXY has a history of long-term trends, both bullish and bearish, which positions it as an attractive asset to trade. On the monthly time frame, since price broke above last year’s high at 96.88, price has gained 7.7%. Price was particularly bullish in April with a gain of 4.9% and June has also been bullish with a gain to date of 2.8%. Price created an all-time high this month at 105.522.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Price is currently battling a major pivot level at 104.05. This week’s candle was indecisive. Whilst on the daily time frame below, price is trading above the 20, 50 and 200 SMA, and the Sublime trend filter is also green.
USDJPY is an asset with a history of trends. As we mentioned in recent weeks discussing CHFJPY and GBPJPY, investing in forex assets can be difficult, but with the right knowledge and support, such as that which our Phoenix community receive, successfully trading the asset class is achievable.
We first entered USDJPY earlier this year. Price has been particularly bullish since price broke above last year’s high at 115.52, with a gain to date of 17%. June’s monthly candle has displayed bullishness with a gain to date of 4.9%. The return to date on the total portfolio is currently modest, however, we anticipate this asset trending for many months.
The total amount of time required to set up and manage this trade has been less than one hour – 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.
This week the markets have again demonstrated volatility. As a result, we look to other markets to realise the benefits of trend trading, such as currencies and DXY. We continue to actively monitor all markets, scanning for opportunities such as DXY, and sharing these with our Phoenix community for good returns.
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Keep it simple. Keep it Sublime.
The ST Team