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 pulled back by -0.3% to close the week at 4464, which follows last week’s decline of -2.3%. This modest weakness is to be expected after the strength displayed since March where the S&P 500 returned five consecutive months of gains. Price remains 26% above the October 2022 lows. Price never moves in a straight line, and educated investors such as those in our Phoenix community, understand how price moves and apply patience during these periods as we await the next round of breakouts. This week’s weakness has resulted in 63 breakouts compared to 24 breakouts last week. On a sector basis, the S&P 500 comprises 11 sectors, and 10 sectors have breakouts, an increase from 5 in the previous week.
This week we added 1 US stock to our portfolio. We currently hold 11 US stocks and 2 currencies. We have compounded a number of these assets, as they are trending and performing well, in turn, delivering excellent profit for our Phoenix community members.
On the weekly time frame, the S&P 500 remains above both the 50 and 200 SMA (Simple Moving Average). The moving averages are aligned, indicating a consistent trend. Our proprietary tool, the Sublime trend filter, continues to present a green signal – for the 17th consecutive week – further reinforcing the strength of the current market. On the daily time frame, the S&P 500 is using the 20 SMA as support, creating a series of higher highs and higher lows. The Sublime trend filter is also presenting a green signal.
The FTSE 100, the UK’s premier index, also displayed weakness with a decline of 0.5%. Price remains in a range, with price above both the 50 and 200 SMAs and below the all time high at 8047. We continue to monitor this index, waiting for confirmation of direction.
PERFORMANCE REVIEW
British Pound Versus Japanese Yen - GBPJPY
GBPJPY is the relative currency unit value of the British Pound against a unit of Japanese Yen in the foreign exchange market. GBPJPY has a history of long-term trends, both gaining and declining in relative value. This history provides confidence that trends are likely to continue in the future.
On the monthly time frame, price has been in a strong trend since price broke above last year’s high in March 2023, gaining over 7%. We first entered GBPJPY in April, and we have since compounded on multiple occasions. The next area of resistance is the 200 round number, which coincides with the pivot high from June 2015.
The total performance to date is a 420% Return On Investment and 8% Return On Capital, applying a full portfolio risk of 2%.
This asset is an excellent example of diversifying a portfolio beyond the stock market. The total amount of time required to set up and manage this trade has been less than three hours over five months – this is the benefit of trend trading; using higher time frames such as monthly and weekly charts to avoid the noise and volatility 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
Eli Lilly Corporation - 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.
LLY has been following a remarkable long-term trend since August 2018, witnessing an impressive gain of over 380%. This enduring upward movement speaks to the stock’s potential and its ability to deliver substantial returns over time.
More recently, LLY has exhibited a strong trend, particularly since surpassing last year’s high in April. This breakthrough has resulted in strong momentum, indicating positive market sentiment surrounding the stock.
LLY closed the week at $528, registering an increase of 17.5% over the past week, following a further breakout upon earnings. Looking at the bigger picture, LLY has generated an impressive return of 45% in 2023, showcasing its potential as an attractive investment option.
Examining the technical indicators on the weekly time frame, LLY’s price continues to trade above both the 50 and 200 SMAs. Our proprietary tool, the Sublime trend filter, remains consistently green, providing further confirmation of the stock’s favourable conditions.
On the daily time frame, the Sublime trend filter is also green, confirming positive momentum. Furthermore, LLY’s price is currently trading above the 20, 50, and 200 SMAs, reinforcing the bullish sentiment. The alignment of the moving averages serves as an indicator of near-term strength, while the utilisation of the 20 SMA as support has resulted in higher highs and higher lows, further solidifying the positive outlook.
Looking ahead, it is important to consider potential areas of resistance. The next significant hurdle for LLY is the $600 round number. If the stock manages to sustain a continuation pattern above its all-time high and most recent breakout, it may present an enticing opportunity for our Phoenix community members. LLY’s history of long-term trends makes it a stock worth considering for those seeking lucrative investment prospects.
Looking Ahead
The momentum in the main indexes, such as the S&P 500, continues despite the recent pullback. Our position is the bulls are firmly in control, resulting in many 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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