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 again declined. With the September month complete we can now fully assess the results for the month and third quarter.
On the monthly time frame, the S&P 500 had a significant decline of 9.3%, resulting in a decline from the all-time high of over 22%. On the weekly time frame, the S&P 500 declined by 2.8% which follows last week’s decline of 4.9%. On the weekly time frame price continues to trade below the 50 SMA but, importantly, remains at the 200 SMA. On the daily time frame, price continues to look bearish with price trading well below the 20, 50 and 200 SMA. The concern for the bulls is there is little sign yet of price exhaustion to the downside – this week price took out the prior year pivot low at 3662, along with the pivot low from June at 3637. A positive for the bulls is the potential support with the weekly 200 SMA at 3589.
The weakness in the S&P 500 was seen across the markets, with weekly declines in both the Nasdaq 100 and Dow Jones indices of 2.9% and 2.8% respectively.
This week the FTSE 100, the UK index, weakened by 1.8% to now remain below both the 50 and 200 SMA. There is potential support at 6788 but failing that, the next level of support is the prior year low at 6397.
THIS WEEK'S TOP STOCK
AZPN - Aspen Technologies
Aspen Technology, Inc., known as AspenTech, is a provider of software and services for the process industries headquartered in Bedford, Massachusetts. AspenTech has 35 offices around the world, on all continents (excluding Antarctica). Founded in 1981, AspenTech was born out of a joint research project between the Massachusetts Institute of Technology (MIT) and the US Department of Energy—called the Advanced System for Process Engineering (ASPEN) Project.
AZPN is a stock with a history of linear trends dating back to 2011. These trends are evident on the monthly time frame during 2012-13 and 2016-18. Price broke above last year’s high in May and has since gained 50%, resulting in an all-time high this week of $241.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Price action has been reasonably neat since July with a series of small bull flags as price moves higher.
On the daily time frame, the Sublime trend filter is also green. Price is currently trading above all moving averages; importantly, all moving averages are aligned.
Looking ahead, the next area of potential resistance is the $250 round number, followed by the $300 round number. A continuation pattern above the all-time high and the formation of a linear trend could present opportunities for our Phoenix community members.
STOCK PERFORMANCE REVIEW
USDJPY 8% ROC and 391% ROI
USDJPY is an asset with a history of trends. As we mentioned previously, investing in forex assets can be difficult, but with the proper knowledge and support, such as that which our Phoenix community receive, successfully trading the asset class is achievable.
We first entered USDJPY earlier this year. Price has been particularly bullish since price broke above last year’s high at 115.52, with a gain to date of 26%. September’s monthly candle closed very bullishly with an increase of 4.2%, following August’s gain of 4.3%. Looking ahead, we will monitor this asset as it approaches the $150 round number.
The return to date on the total portfolio (‘ROC’ Return On Capital) is currently 8%; we have compounded this position twice, and we anticipate this asset trending for many months as we continue to see strength in the US Dollar Basket (‘DXY’). Whilst the return on investment or risk (‘ROI’) is 391%, which demonstrates the incredible power of following trends and sensible compounding as price moves in our favour.
The total amount of time required to set up and manage this trade has been less than three hours – 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 declined significantly. 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