Welcome to another edition of our weekly newsletter where we provide an overview of the main US and UK indices, a specifically selected outperforming asset with deep analysis. 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
This week the US and UK equity markets have demonstrated signs of stabilisation, following the recent extreme volatility. Over the week, the S&P 500 gained 4.9%, with strong gains on Monday and Friday and weakness mid-week. This week’s gain is the largest since 20th June.
On the monthly time frame, the S&P 500 has shown strength with a gain to date of 4.7% On the weekly time frame, the S&P 500 has used the 50 SMA as support – a level to watch ∂we mentioned last week. On the daily time frame, price has formed an area of consolidation between 3580 – 3800. Price closed the week trading above the 20 SMA but remained below the 50 and 200 SMAs. The outlook for the S&P is to watch for further price action to break out above 3800.
The recent strength in the S&P 500 was seen across the markets, with gains in the Nasdaq 100 and Dow Jones indices. The Nasdaq 100 gained 5.9% over the week, whilst the Dow Jones gained 5.0%. All US Indices are now trading above their 50 SMA.
This week the FTSE 100, the UK index, gained 1.6% and is now trading back above the 200 SMA. The support level at 6788 we mentioned last week is currently holding. On the daily time frame, price closed above the 20 SMA for the first time since 12th September.
OUTPERFORMING ASSET FOR THE WATCHLIST
LLY - Eli Lilly And Company
Eli Lilly And Company is a stock which first floated in 1970; it wasn’t until twenty-five years later that a trend emerged, lasting over two years! The stock suffered a low point following the great financial crisis of 2007-8, but since then has been in a long-term trend, gaining some 1,300%! Whilst trends historically haven’t been the cleanest, price is currently showing signs of genuine bullishness. Price broke out above last year’s high in March and has since gained over 20% whilst the S&P 500 has declined by 18% over the same time frame.
On the weekly time frame, the price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week’s price broke out to an all-time high with a strong, bullish bar. The Sublime trend filter is also green on the daily time frame. Price is currently trading above all moving averages, which are all aligned.
Looking ahead, LLY has earnings on 1st November. A continuation pattern above the current all-time high could offer our Phoenix community members an opportunity in a bullish stock. The next area of resistance is the $400 round number.
OUTPERFORMING ASSET FOR THE WATCHLIST
MCK - McKesson Corporation
We last wrote about MCK in our newsletter on 31st July. MCK is a stock with a history of trends. Price created an all-time high of $375 in August, and this week price closed bullish and is very close to breaking out above this level. This could result in further compounding opportunities should we see a continuation pattern at this level. The next area of resistance is the $400 round number.
We first entered MCK in early January and have since compounded three times to have four positions in total. The total performance to date is 12% Return On Capital and 1219% Return On Investment, applying a total risk of 1%. This stock is a good example of a trending stock in a volatile market. The total amount of time required to set up and manage this trade has been less than three hours over ten months – 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 US and UK indices have again demonstrated significant volatility. We continue to monitor all markets actively, scanning for opportunities such as the stocks described today, along with the JPY forex pairs and Dollar strength, and sharing these with our Phoenix community for excellent returns.
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Keep it simple. Keep it Sublime.
The ST Team