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
This week, U.S. indices recovered from the prior week’s downturn, resuming their long-term upward trajectory.
The S&P 500 ended the week at 5626, marking a 4.0% increase. The index is now less than 1% below its all-time high of 5670. Notably, this week saw the price regain both the daily 20 and 50 simple Moving Averages (SMAs). Year to date, the S&P 500 has delivered an impressive 18% gain. Despite recent volatility, bullish momentum remains intact, with the index up 36% from its October 2023 low and 59% from its October 2022 low.
While broad indices like the S&P 500 provide an overall market perspective, they do not capture the complete picture. We continue to observe strong outperformance from individual stocks such as PGR, UNH, KO, and MMC, all of which we have highlighted in recent months.
The Nasdaq 100 posted a 5.9% gain, fully reversing last week’s losses, while the Dow Jones increased by 2.9%.
In the UK, the FTSE 100 gained 1.1%, closing at 8273. After surpassing its all-time high in April, the index consolidated between 8100 and 8300 from June to August. Although showing signs of strength, it has now re-entered this consolidation range.
OUTPERFORMING ASSET FOR THE WATCHLIST
Microsoft Corporation – MSFT
Microsoft (ticker: MSFT) needs little introduction. as the most prominent software seller dominating the PC market with its uber-popular Windows operating system and Office software packages. They also broke into gaming in 2001 with the Xbox. Microsoft ranked No. 14 in the 2022 Fortune 500 rankings of the largest United States corporations by total revenue; it was the world’s largest software maker by revenue as of 2022. It is considered one of the Big Five American information technology companies, alongside Alphabet, Amazon, Apple, and Meta.
Since July 2016, MSFT has maintained a robust long-term trend, solidifying its status as a noteworthy stock. Over this period, the price has surged by an impressive 650%. For trend followers, MSFT undeniably stands as the king of stocks, exemplifying its remarkable market returns.
Throughout 2022 price experienced an uncharacteristic decline, resulting in a bottom in November 2022 at $213. In 2023 the bulls regained control, and price subsequently gained 100%.
On the weekly time frame, MSFT continues to trade above the 50 and 200 SMAs. Our proprietary tool, the Sublime trend filter, is green, reinforcing the bullish outlook. Notably, this week price bounced off the weekly 50 SMA. Whilst on the daily time frame, the Sublime trend filter also remains green. MSFT is also trading above the 20, 50, and 200 SMAs. However, the moving averages are not fully aligned.
Looking ahead, should a continuation pattern emerge above the all-time high, MSFT could present an opportunity for our Phoenix community members, who have profited handsomely in this stock for a number of years.
OUTPERFORMING ASSET FOR THE WATCHLIST
McDonald’s Corporation – MCD
McDonald’s Corporation (ticker: MCD) is a multinational fast-food chain that operates in over 100 countries worldwide. Founded in 1940, the company is headquartered in Chicago, Illinois. McDonald’s is one of the largest fast-food chains globally, serving millions of customers each day.
Looking at the monthly chart, MCD is in an uptrend that commenced in October 2015. MCD started the year at $264 and in a period of consolidation. Price is currently trading at $297, less than 3% from the all-time high of $302. Price has been particularly bullish since July, resulting in a gain of 22%.
On the weekly chart, MCD is in a bullish trend, and the Sublime trend filter is green. The weekly 50 and 200 SMA are both aligned in an upward direction, and the price is currently trading above both these averages, indicating bullish momentum.
Looking at the daily chart, the price of MCD is currently trading above the 20, 50 and 200 SMA, however, the moving averages are not yet fully aligned. The Sublime trend filter is green.
In the past, our Phoenix Community has traded MCD for an excellent profit. A continuation pattern above the all-time high could offer our investors an opportunity in a very bullish stock. The next area of resistance above the $300 round number and all-time high is the $350 round number.
Looking Ahead
This week, U.S. markets rebounded from the previous week’s downturn, reaffirming our belief that the broader strength continues to favour the bulls. As seen in both August and earlier this month, our measured and disciplined approach has proven successful, with our positions benefiting from the sustained positive momentum in the markets. The gains in trending stocks have bolstered the profitability of our open positions, validating our strategy.
We currently hold positions in a substantial number of stocks exhibiting strong trends. As always, we will remain focused on letting price action dictate our next moves, ensuring we remain aligned with market dynamics and well-positioned to capitalise on emerging opportunities.
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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