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
As we have observed in previous newsletters, all three 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. Whilst all three indices are trading below the daily 200 simple moving average (SMA), May’s monthly candle for all indices displayed indecision. The first week of June has commenced with weakness, particularly last week when the lows of 2022 are being retested.
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.
As previously mentioned, whilst all equity markets are displaying continued weakness in 2022, we are not currently considering short positions. All US and UK indices are trading above the weekly 200 SMA. Furthermore, all US and UK indices are still trading above the pre-pandemic highs; indicating the strength of the bull run throughout 2020 and 2021. We believe the long-term trend, which commenced in 2008, is the dominant market direction.
OUTPERFORMING STOCK FOR THE WATCHLIST
The Hershey Company - HSY
The Hershey Company is a stock with a strong history of trends such as 2011-13, 2019, and 2021-22. Since December last year, price has gained 20% whilst the S&P has declined 15% over the same period. June is displaying a modest gain of 0.8%.
On the weekly time frame, price continues to trade above the 50 and 200 SMA, and the Sublime trend filter remains green. Price found support around the $200 and stabilised, following a sharp decline in May.
On the daily time frame below, price is trading above the 20 and 200 SMA, but below 50 SMA. The Sublime trend filter is also green. Price is trading above last year’s high at $194, along with the £200 round number.
Looking ahead, a continuation pattern above the current all-time high could offer our Phoenix community members an opportunity in a very resilient stock in generally bearish market conditions. The next area of resistance is the all-time high at $232 followed by the $300 round number.
PERFORMANCE REVIEW
GBPJPY
GBPJPY is an asset with a history of trends. As we mentioned last week with CHFJPY, 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 GBPJPY in April this year. Similar to CHFJPY, we monitored the asset through the pullback in April and May, and strength subsequently returned. May’s monthly candle was an indecision candle and June has displayed bullishness with a gain to date of 2.1%. The return to date on the total portfolio is modest at less than 1% using a total risk of just 2%, however, we will let price dictate our next move; 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.
Looking Ahead
This week the markets have again demonstrated volatility. A key skill to trend trading is patience; we await to see if the weakness experienced throughout 2022 has been exhausted. We continue to actively monitor the markets, scanning for opportunities such as HSY, and sharing these with our Phoenix community for good returns.
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Keep it simple. Keep it Sublime.
The ST Team
