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

Strength in the S&P 500 has continued, with the pullback seen in April being fully reversed in May, with a gain of 4.8%. The S&P 500 closed the week at 5278, a weekly decline of 0.5%. Weakness earlier in the week was reversed on Friday with price using the 20 SMA as support, gaining 0.8%. The Nasdaq 100 closed the month of May with a gain of 6.3%, whilst the Dow Jones Index gained 2.5%.

The bullish momentum in equity markets remains strong. The S&P 500 has surged 26% since the low in October 2023 and 48% since the low in October 2022.

We continue to see individual stocks perform well. Our portfolio currently comprises over 20 US stocks, including LLY, AMP, META, NVDA and MCK. We have compounded these assets on multiple occasions, resulting in excellent profit for our Phoenix community members.

The FTSE 100, the UK’s premier index, gained 1.6% in May to close at 8275. Following a breakout above the all-time high in April, price has been bullish. As a result, we are now actively looking for opportunities.

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 June 2023 after the stock closed above last year’s high and the $400 round number. Since then, price has been extremely bullish, gaining over 100%. 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. The next area of potential resistance is the $900 round number.

The total performance to date is a 2,857% Return On Investment and 57% 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

McKesson Corporation – MCK

McKesson Corporation (ticker: MCK) is an American company distributing pharmaceuticals and providing health information technology, medical supplies, and care management tools. The company delivers a third of all pharmaceuticals used in North America and employs over 51,000 employees. McKesson had revenues of $276 billion in its fiscal year ending March 31, 2023.

MCK is a stock with a history of long-term trends, such as 2013-2014 and, more recently, since 2021. Commencing with a breakout in March 2021, MCK has been in a very strong trend, gaining over 200%.

On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter, our proprietary tool, is green.

Whilst on the daily time frame below, the Sublime trend filter is also green, with price trading above the 20, 50 and 200 SMAs. The linear trend is evidenced by price consistently using the 50 SMA as support, with price making a series of higher lows and higher highs. 

Phoenix community members have traded this stock for excellent profit over a number of years. We anticipate further opportunities to add to our current positions will present themselves, as the trend continues. The next area of potential resistance is the $600 round number.

Looking Ahead

The volatility experienced in April has been fully countered by strength in May. We believe the bullish trend continues to dominate both the US and UK equity markets. Our numerous positions are benefiting from this momentum. As always, we will let price action guide 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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