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
The decline in the S&P 500 continued this week, with a drop of -2.9%, to close the week at 4320. The S&P 500 ended the week creating a new low for September, below the low of August. The index is trading below a key level, meaning there may be further weakness. September is historically a weak month for equities, and this year is proving to also be the case, with a decline in the month to date of -4.2%. However, as long-term investors, the bigger picture has more relevance and the S&P 500 remains 24% above the October 2022 lows. This week there are 9 breakouts, an expected reduction when compared to last week’s 59. On a sector basis, three of eleven sectors remain in a breakout position.
Despite the pullback in the indices, we are seeing individual stocks perform well. This week we have added 1 US stock to our watchlist. Our portfolio currently compromises 14 US stocks and 3 currencies. We have compounded a number of these assets, in turn, delivering excellent profit for our Phoenix community members.
Examining the technicals, on the weekly time frame, the S&P 500 remains above both the 50 and 200 SMAs (Simple Moving Average). The moving averages are aligned, indicating a consistent trend. Our view is that price action in September is an expected seasonal activity. We favour a fake breakdown and a reversal to the upside. We continue to remain bullish. We will let price dictate our next move.
The FTSE 100, the UK’s premier index, followed up last week’s significant gain with a modest decline of -0.4%. Should strength continue to the update then the next area of potential resistance is the pivot high from 17 April at 7936. The all-time high is 8047. We continue to monitor this index, waiting for confirmation of direction.
OUTPERFORMING ASSET FOR THE WATCHLIST
Marathon Petroleum Corporation - MPC
Marathon Petroleum Corporation (ticker: MPC) is an American petroleum refining, marketing, and transportation company headquartered in Findlay, Ohio. The company was a wholly owned subsidiary of Marathon Oil until a corporate spin-off in 2011. In 2018, Marathon Petroleum became the largest petroleum refinery operator in the United States, with 16 refineries and over 3 million barrels per day of refining capacity.
MPC is a stock with a history of strong trends such as 2016-2018, and more recently, following the covid pandemic, where price has since gained over 800%. Throughout 2022 price was bullish with a gain of 82%. And the momentum has continued into 2023 with a gain to date of 33% and an all-time high this month.
On the weekly time frame, price is in an uptrend. Price is trading above both the 50 and 200 SMA, and the Sublime trend filter is green. Since price broke above the 50 SMA on 26 June, price has been bullish, gaining over 30%. Whilst on the daily time frame, price remains above all moving averages and the Sublime trend filter is also green.
A continuation pattern above the current all-time high could offer our Phoenix community members an opportunity in a good-performing stock. The next area of resistance is the $200 round number.
OUTPERFORMING ASSET FOR THE WATCHLIST
Caterpillar Inc. - CAT
Caterpillar Inc. is an American Fortune 500 corporation and the world’s largest construction-equipment manufacturer. Caterpillar traces its origins to the 1925 merger of the Holt Manufacturing Company and the C. L. Best Tractor Company, creating a new entity, California-based Caterpillar Tractor Company. In 2018, Caterpillar was ranked number 65 on the Fortune 500 list and number 238 on the Global Fortune 500 list. Caterpillar stock is a component of the Dow Jones Industrial Average.
CAT is a stock that has a history of trends, such as in 2016-2018 and 2020-21. Throughout the second half of 2021 and 2022, the stock was in a large range. The momentum displayed in October 2022 resulted in an all-time high in January. Price then pulled back until the bulls regained control in June, resulting in a further impulsive move higher.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Whilst on the daily time frame, price is in a small area of consolidation following the all-time high on 2 August. This is to be expected following the strong move throughout June and July.
Looking ahead, the next area of resistance is the $300 round number. Price could be headed for another extended trend, which could present opportunities for our Phoenix community members in a stock we have traded for excellent returns in the past.
Looking Ahead
Price action in September continues to be mixed. As long term inventors, patience is a key weapon in our arsenal. We are currently applying the necessary patience, and await price to dictate our next move. Despite the recent pullback, our position is the bulls remain in control, resulting in 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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