Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
Last week we discussed the importance of investing in knowledge, to build the knowledge and skills necessary to navigate through difficult market periods such as throes we’re currently experiencing. At Sublime Trading we ensure our trading and investing community gains the necessary education before using our proven strategies and tools in the markets.
This past month has been a perfect example of where education and understanding of market cycles would ensure investors were not sucked into knee-jerk actions. Many news outlets, self-proclaimed pundits and experts have been calling a sustained bear market. This week the S&P 500 closed-back about the 200 simple moving average. We of course do not know at this stage whether this position will hold, but what we do know is that the immediate meltdown in the markets has not materialised. Over recent weeks many traders and investors will have taken speculative short positions; when they close these positions, this will only add momentum to the resumption of the bull trend that began back in 2008.
Our trading principles are based on price and price action. We do not try to explain, nor predict, price movements. Price is always right; the most reliable indicator. We continue to stand aside during this period, whilst we await clear direction. As standing aside is a conscious action in itself, we continue our daily routine of monitoring the markets.
At Sublime Trading, we have a clear trading plan that governs our approach. This is the value of our education programme, where we teach members the right techniques to manage in all market conditions.
Let’s get into this week’s newsletter!
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Here are how the best-performing UK & US stocks, as picked out by our scanning process, have
performed this week.
For a glossary of terms click here.
OUTPERFORMING STOCKS COVERED THIS WEEK
UK Stocks
US Stocks
FTSE 100
On the monthly time frame, the strength displayed in December initially continued into 2022, however, weakened this month. March has been a volatile month, with initial weakness matched by recent strength, resulting in a very large wick forming below price, which we will monitor.
On the weekly time frame, this week the Sublime trend filter switched from grey to green; a sign of strength building. Price is trading above both the 50 and 200 SMA.
On the daily time frame below, since price failed at a key pivot level on 10 February this year, price displayed weakness. Price this week has consolidated above all moving averages, however, the moving averages are not aligned; the 20 SMA is trading below the 50 SMA. This week the Sublime trend remained grey. Our overall bias remains bullish, however, we are standing aside until market direction becomes clearer.
UK STOCKS
Alliance Trust - ATST
A stock that is in an overall uptrend, however, like many stocks, has had a volatile start to 2022. Weakness in January and February initially continued into March, however recently the bulls have stepped in resulting in a large wick below price.
On the weekly time frame, price is trading below the 50 SMA but above the 200 SMA. This week the Sublime trend filter switched from red to grey.
On the daily time frame below, price is currently trading at the 20 SMA, and above the 50 and 200 SMA. The Sublime trend filter is grey. On 8 March price used a major pivot level at £8.80 as support. However, with price below the 200 SMA, we will monitor this stock and update our Phoenix community members if a trend forms above this important indicator.
Big Yellow Group - BYG
This stock has a history of trends, however, trends haven’t been the most linear when compared to high-quality trending stocks. Since price broke above a key level of £12.40 in May last year price has been erratic; swiftly moving higher and then pulling back sharply. March is showing strength with a gain to date of 8.5%.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is grey. Over the past three weeks price has gained 16%.
On the daily time frame below, as mentioned, this year commenced with weakness resulting in price trading below all moving averages. However, the bulls have stepped in and momentum is building. Price is trading above all moving averages, however, the averages are not aligned. This week the Sublime trend filter switched from grey to green. This is a stock to watch, but not one that is high on our watchlist, given its history of performance. We will share any opportunities with our Phoenix members.
Safestore Holdings - SAFE
A stock with a long-term trend dating back to January 2014. In 2021 price broke above a key pivot level at £8.87 and created an all-time high at £14.60 on 4 January this year. However, since then price has been weak, resulting in a decline peaking at 24% but regaining its footing, reducing the decline to 11%.
On the weekly time frame, price is trading above the 50 and 200 SMA. The Sublime trend filter is green.
On the daily time frame below, the Sublime trend is grey. Price is trading above all moving averages; 20, 50 and 200 SMA, however, the 20 SMA is trading below the 50 SMA. The next area of resistance is the all-time high at £14.60. We will continue to monitor this stock and share updates with our Phoenix community, should recent strength continue.
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S&P 500
The year started with weakness in the S&P 500; January declined by 5.8%. As previously mentioned, January is often a weak month for the S&P 500, particularly following strength into the end of the previous calendar year. This weakness continued into February resulting in a 2.8% decline, but with a large wick below price. March initially displayed weakness but strength has returned in recent weeks, resulting in a gain to date of 3.8%, however, there is a large wick below price to be aware of.
On the weekly time frame, price is trading back above both the 50 and 200 SMA. Last week was particularly bullish with a gain of 6.4%, and this week the momentum has continued with a gain of 1.4%. The Sublime trend filter is grey.
On the daily time frame below, price made a new all-time high at 4820 on 4 January, before weakening. Price continued its recent strength and is now trading above all moving averages, however, the averages are not aligned. The pattern of lower highs and lower lows mentioned last week has been confirmed as broken; another sign of potential strength. As stated in our initial commentary, we will wait to fully assess the market. Our view is that the long term bull trend from 2008 remains intact.
US STOCKS
Apple - AAPL
Apple is one of the most popular stocks in the NASDAQ. It has a history of impulsive trends but does suffer periods of pullback and consolidation. On the monthly time frame, price was bullish following the pandemic where price moved from $60 to $130. However, since then the trend has been less linear. In January price created an all-time high at $183, however, price subsequently weakened. To date, price this month is displaying strength with a gain of 5%.
On the weekly time frame below, price is in a long-term uptrend with price trading above both the 50 and 200 SMA. This week the Sublime trend filter switched from grey to green.
On the daily time frame below, price has regained strength to close back above 20 and 50 SMA. The Sublime trend filter also switched from grey to green. A continuation pattern above the current all-time high could provide further opportunities before the $200 round number, the next area of resistance.
AbbVie Incorporated - ABBV
A stock with a mixed history of trends and long periods of weakness. Price this week created a new all-time high of $161, confirming the breakout from December last year. March to date is displaying a gain of 8.9%.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, the Sublime trend filter is also green. Price is trading above the 20, 50 and 200 SMA. Since price broke out following earnings on 3 February, price has been using the 20 SMA as support. The next area of resistance is the $200 round number. A continuation pattern above the current level could offer an opportunity, which we will share with our Phoenix community.
Archer Daniels Midland Company - ADM
This stock with a mixed history, since price broke above the previous year high at $70, price has been particularly bullish with a gain of 32%. March has gained 16% to date.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, the Sublime trend filter is green, and price is trading above the 20, 50 and 200 SMA. The moving averages are all aligned and angling up, indicating linearity in the current trend. The next area of resistance is the $100 round number. This stock is evidence that select stocks are performing well, despite broad market weakness. We will monitor this stock and update our Phoenix community accordingly.
Berkshire Hathaway - BRK.B
A stock with a history of trends lasting 1-2 years. We have discussed this stock in recent weeks, along with December’s newsletter – where we noted a potential breakout month. This assessment was correct, and price subsequently made light work of the $300 round number, to create a new all-time high this week at $356.
The Sublime trend filter is green on the weekly time frame, and price is trending above the 50 and 200 SMA. Following the breakout described above, price retreated to the $300 round number and major pivot level and subsequently regained strength.
The daily time frame below shows an impulsive move since price bounced off the 200 SMA in early December. Price is currently trading above the 20, 50 and 200 SMA, and the Sublime trend filter is green. The longer the consolidation, the larger the breakout. With price breaking out from consolidation going back to May last year, we anticipate a strong trend to develop, but patience is required. We will update our Phoenix community on further opportunities in this trending stock.
Cincinnati Financial - CINF
A stock with a mixed history, price was in a strong trend between 2011 and 2016, and again throughout 2019. However, this stock was severely impacted by the pandemic, decreasing in value by some 61%. Price subsequently regained strength and this week created a new all-time high at $136.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week price continued the momentum after last week’s breakout from consolidation.
On the daily time frame below, the Sublime trend filter is also green, and price is above the 20, 50 and 200 SMA. The moving averages are all aligned. The next area of resistance is the $200 round number. Whilst we have seen a breakout this month, at this stage we need to apply patience and let price dictate. A linear trend could offer Phoenix members an opportunity.
McKesson - MCK
A stock with an interesting mix of strong trends and periods of consolidation. Between November 2012 to June 2015 price was in a very strong trend, gaining 150%. More recently, since price broke above the monthly pivot at $179 in March last year, price has also shown strength, with a gain to date of 73%.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, the Sublime trend filter is green. Price is currently using the 20 SMA as support, trading above the 20, 50 and 200 SMA. This week’s price closed above the $300 round number. We will wait to assess whether price will use this level as support. A continuation pattern above the current level could offer Phoenix members an opportunity in a stock with a history of strong trends.
W.R. Berkley Corporation - WRB
WRB is a stock that has been in a long term trend, but the quality of the trend has not been particularly good. This stock also has a history of bullish moves higher before quickly retreating, such as during 2019 and 2020. More recently, price has been bullish since bouncing off a key pivot level at $55, gaining 20%.
On the weekly time frame, the Sublime trend filter is green. Price has shown strength over the past three weeks. Price is trading above the 50 and 200 SMA.
On the daily timeframe below, price is trading above the 20, 50 and 200 SMA, and the Sublime trend filter is also green. Given the erratic price action described above this stock is not high on our watchlist, however, we will monitor it and update our Phoenix community should a trend emerge.
This week the markets have displayed signs of strength building. We are currently standing aside, waiting for prices to give evidence of a clear direction. As mentioned above, we anticipate the bull trend, which commenced in 2008, will continue. We will continue to monitor the markets, and act according to our trading plan.
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Keep it simple. Keep it Sublime.
The ST Team
