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

After last week’s historic close above 5000, this week the S&P 500 pulled back to retest this level. This is expected, and we may find a battle emerges over the coming days and weeks between the bulls and bears.

This week the S&P 500 declined 0.4%, to close at 5006. The index is on a 22% run – with gains in 14 of the past 16 weeks. The bulls are firmly in control of the index. 

We continue to see individual stocks perform well. Our portfolio currently compromises over 20 US stocks, including LLY, AMP and META. We have compounded these assets, in turn, delivering excellent profit for our Phoenix community members.

The FTSE 100, the UK’s premier index, had a strong week gaining 1.8% to close at 7712. Price remains range bound between 7200 and 7750. 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.

PERFORMANCE REVIEW

Eli Lilly and Company – LLY

Eli Lilly and Company (ticker: LLY) is a pharmaceutical company that develops and produces medication for various diseases and conditions. Its products are sold in approximately 125 countries. The company was founded in 1876 and is best known for its clinical depression drug Prozac. Lilly’s achievements include being the first company to mass-produce the polio vaccine and insulin.

Our breakout strategy identified LLY as a high probability candidate in May after the stock closed above last year’s high and the $400 round number. Since then price has been extremely bullish, gaining 99%. Our strategy has capitalised on this trend by compounding multiple times, whilst maintaining a 2% portfolio risk. Looking ahead, we can expect the trend to continue, with the moving averages 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 $800 round number.

The total performance to date is a 2,550% Return On Investment and 51% Return On Capital, applying a full portfolio risk of 2%. 

LLY is an excellent example of how a stock can form a bullish trend following a breakout from a key resistance level. The total amount of time required to set up and manage this trade has been less than 6 hours over 10 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

White Mountains Insurance Group – WTM

White Mountains Insurance Group (ticker: WTM) is a diversified insurance and related financial services holding company based in Hamilton, Bermuda. Redomiciled from Delaware in 1999, the company conducts most of its business through its insurance subsidiaries and other affiliates.

WTM is a stock that has been in a long-term trend since the end of the great financial crisis in 2009, gaining over 1000%. And more recently, since price retested the $1000 round number in December 2021, price has been in an uptrend, gaining 82%. This month has been particularly bullish, with a gain to date of 14.8% and an all-time high.

On the weekly time frame, price is trading above the 50 and 200 SMA, and our proprietary tool, the Sublime trend filter, is green. Whilst on the daily time frame the Sublime trend filter is also green. Price is currently trading above all moving averages, which are all aligned.

Looking ahead, the next area of resistance is the $1900 round number. Price could be headed for another extended trend, which could present opportunities for our Phoenix community members in a stock we have traded for excellent returns in the past.

Looking Ahead

The bulls remain in control of the US equity markets. We have a large number of positions which are profiting from this momentum. As always, we will let price dictate 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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