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 performance of the S&P 500 resulted in a modest gain of 0.45%, which follows up last week’s gain of 0.48%. The modest gain is reflected in the number of breakouts our scanners have identified, with 32 breakouts this week, the same number as last week. We expect the number of breakouts to increase as the markets recover from last month’s pullback.
On a sector basis, nine of eleven sectors are in a breakout position.
Despite September’s modest pullback, we are seeing individual stocks perform well. We have taken this opportunity to add to our portfolio with 3 US stocks. Our portfolio currently compromises 15 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). Last week we discussed support at 4200, a level that price respected. We continue to remain long-term bullish. We will let price dictate our next move.
The FTSE 100, the UK’s premier index, followed up last week’s decline with a counter-gain of 1.4%. Price is now trading back at the weekly 50 SMA and daily 200 SMA. Looking at the bigger picture, price is in a large range of consolidation between 7200 and 7700. Should strength return, the next major 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
Progressive Corporation - PGR
Progressive Corporation is an American insurance company, the third-largest insurance carrier and the largest commercial auto insurer in the United States. The company was co-founded in 1937 and is headquartered in Mayfield Village, Ohio. The company insures passenger vehicles, motorcycles, RVs, trailers, boats, PWC, and commercial vehicles. Progressive also provides home, life, pet, and other insurance through select companies. The company is ranked No. 74 on the 2021 Fortune 500 list of the top American corporations.
Looking at the monthly chart, PGR is a stock in a long-term uptrend, with a gain of over 321% since January 2017. From a trend-trading perspective, PGR is a high quality stock our Phoenix Community has traded for good profit in the past. Following a sharp decline in July, price has been in a strong uptrend, gaining 23%. October has been particularly bullish with a gain of 11%, resulting in an all-time high.
On the weekly chart, PGR 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 PGR is currently trading above the 20, 50 and 200 SMA, and the moving averages are now fully aligned. The Sublime trend filter is green.
PGR announced earnings on Friday and investors responded, resulting in a gain of 8%. We will monitor this price action. A continuation pattern above this level could offer our Phoenix community an opportunity in a very bullish stock. The next area of resistance is the $200 round number.
OUTPERFORMING ASSET FOR THE WATCHLIST
Cadence Design Systems Inc. - CDNS
Cadence Design Systems, Inc. (ticker: CDNS) is an American multinational computational software company, founded in 1988 by the merger of SDA Systems and ECAD, Inc. The company develops software, hardware and intellectual properties (IP) used to design chips, systems and printed circuit boards, as well as IP covering interfaces, memory, analogue, SoC peripherals, data plane processing units, and verification.
CDNS has demonstrated a consistent upward trajectory since 2012, making it an appealing stock for long-term investors. Between December 2021 and February 2023, the stock experienced a period of consolidation. However, in March, the stock broke out of this range, resulting in a gain of 32%.
With a gain year to date approaching 53%, CDNS is high on our watchlist.
On the weekly time frame, CDNS continues to trade above the 50 and 200 SMAs, indicating positive market sentiment. Our proprietary tool, the Sublime trend filter, remains green, reinforcing the bullish outlook. Moreover, the alignment of the moving averages further supports this positive sentiment.
Similarly, on the daily time frame, the Sublime trend filter remains green, further evidence of a favourable market environment. CDNS is trading above the 20, 50, and 200 SMAs.
Looking ahead, the next notable level of resistance lies at the $300 round number. Should a continuation pattern emerge, our Phoenix community members may find an opportunity in a stock that has yielded profitable trades in the past.
Looking Ahead
With modest gains over the past two weeks, October has started with signs of the bulls re-entering the market. 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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