Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.

Another week, another volatile market.

Following the US Federal Reserve decision this week on interest rates we initially saw a surge in the US markets, only to be followed by an equal plunge. For trend traders, such as those in our educated Phoenix community, these market moves have no immediate relevance to our trading philosophy or approach. That might seem odd to many traders but, as price action, this week demonstrates, short term price moves are often erratic and don’t always result in long term trends.

So what’s next? We don’t know, and any ‘pundit’ or ‘expert’ that says otherwise is simply guessing.

Our simple philosophy is to use price action on higher time frames as the main guide to understanding direction – for this, we use the monthly time frame followed by the weekly time frame. And we use the daily time frame for entries. We don’t attempt to predict the next move, rather we act on price confirmation.

At Sublime Trading, in addition to the above approach, 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.

In addition to our weekly and monthly newsletters, we also offer insights into our trading approach and philosophies via a podcast series, available here.

Let’s get into this week’s newsletter!

PS To get FREE lifetime access to our bespoke analysis tools used in these images and a host of other free essential goodies, complete the ‘Are You On Track To Retire Wealthy’ scorecard!

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, price has been undecided throughout February, March and April. March was a particularly volatile month, with initial weakness matched by latter strength, resulting in a very large wick forming below price. May is currently displaying weakness with a decline to date of 2.1%.

On the weekly time frame, the Sublime trend filter is green. 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. The Sublime trend filter is grey. Our overall bias remains bullish, however, we are standing aside until the market direction becomes clearer.

UK STOCKS

Diageo - DGE

This stock has a history of trends, however, there have been long periods of price reversals. On the monthly time frame, price retreated throughout January to a key pivot level at 3634. During March price initially weakened to trade below this level but the bears couldn’t maintain control, and price subsequently moved higher. April displayed signs of bullishness, ending the month with a gain of 4.0%, however, May has been weak with a loss to date of 5.9%.

On the weekly time frame, price is trading above the 50 and 200 SMA; the Sublime trend filter is green.

With price showing modest strength, we need to see a break and close above the all-time high at 4110 before positions can be considered. The Sublime trend filter remains green, and price is trading above all moving averages. This is a stock to watch, but not one that is high on our watchlist, given its history of performance. We will share any signals with our Phoenix members.

National Grid – NG.

A stock we first discussed several weeks ago; price has a history of trends, but not the cleanest price action. Since the price broke above last year’s high at £10.93, price has shown strength, gaining 7.9%.

On the weekly time frame, the Sublime trend filter is green and price is trading above both the 50 and 200 SMA.

On the daily time frame below, this week’s price continues to trade above the 50 and 200 SMA, but below the 20 SMA. The Sublime trend filter is green. The next area of resistance is the £20 round number. As mentioned, we will monitor this stock, and update our Phoenix members on opportunities.

 

SSE - SSE

This stock has a history of trends, but price action since December 2007 has been in a large range. Price broke out in March and price moved higher in April, gaining 6.9%. May’s candle is currently bearish.

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, price is trading above all moving averages; 20, 50 and 200 SMA. As a result, the Sublime trend filter is 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.

If you have watched the 4-part series and are keen to get started, then book yourself in for a 1-2-1 call with a member of the Sublime Trading team.

S&P 500

The year started with weakness in the S&P 500, with a decline to date of 10.3%. As mentioned in the opening statement, patience is required, as we await price to dictate our next move. Strength in March has been offset by weakness in April and May.

On the weekly time frame, price is trading back below all moving averages; 20, 50 and 200 SMA. The Sublime trend filter is red. This week’s candle is displaying notable weakness with a large wick above price.

On the daily time frame below, price made a new all-time high at 4820 on 4 January, before weakening. Recently, price has shown a mix of days of strength and weakness, reflecting the volatility previously discussed. Price is currently trading below all moving averages, however, has bounced off 4150, which is acting as a level of support. Our view is that the long term bull trend from 2008 remains intact.

US STOCKS

AbbVie Incorporated - ABBV

A stock with a mixed history of good trends and long periods of weakness. After the all-time high in April, price has weakened.

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 grey. Price is trading at the 50, and above the 200 SMA. Since price broke out following earnings on 3 February, price has been using the 20 SMA as support. However, this week’s price pulled back below the 50 SMA, however, we will monitor to assess if this is a pullback. The next area of resistance is the $200 round number. A continuation pattern above the all-time high could offer an opportunity, which we will share with our Phoenix community.

AmerisourceBergen - ABC

This stock has an interesting mix of strong trends and long periods of consolidation. Price showed strength in a trend from January 2013 to May 2015. However, since then price action has been mixed, despite a recent all-time high. December was the first month in several years which displayed a bullish breakout bar, culminating in a 14.8% gain. That momentum continued in 2022 with gains between January and March with a gain of 17%. In April price initially showed strength, but that couldn’t be sustained, resulting in a decline of 2.2% and a large wick above price. In May the bulls have stepped back in to take control.

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 below the 20 SMA, and above the 50 and 200 SMA. Price reacted positively to earnings on 4 May. The next area of resistance is the $200 round number. We will monitor this stock and update our Phoenix community accordingly.

Ameren Corporation - AEE

Price has been in a long-term uptrend since April 2009, however, the trend hasn’t been clean. Between August last year to February, price made several attempts to close above the major pivot level at $88. Price broke out in March but weakened in April.

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 has retreated to last year’s high at $91.

The daily time frame below shows an impulsive move since price broke out on 28 March. Price has subsequently pulled back and is now trading at the 50 SMA. Price is above the 200 SMA. The Sublime trend filter is green. We will update our Phoenix community of any opportunities in this trending stock.

Hershey Company - HSY

Hershey is another stock with a strong performance in December that has continued into 2022. Whilst the historic performance is mixed, this stock has evidence of trending for long periods, as evidenced by the trend that occurred between February 2011 to March 2014. Since December last year price has been bullish with a gain of 27%.

On the weekly time frame, price continues to trade above the 50 and 200 SMA, and the Sublime trend filter remains green. This week price is showing an indecision candle with a large wick below the closing price.

On the daily time frame below, price is trading above the 20, 50 and 200 SMA, and the Sublime trend filter is also green. Since price broke above a key pivot level at $183 on 8 December, price has made an impulsive move higher. Earnings this week initially resulted in weakness, but price has since recovered. We will monitor this stock and update our Phoenix members of any opportunities.

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 94%.

On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week displayed a large engulfing candle, a sign of bullishness.

On the daily time frame below, the Sublime trend filter is green. Price is currently using the zonal area between the 20 and 509 SMA as support, and trading above 200 SMA. Price reacted favourably following earnings on 5 May – despite earnings being a miss. Similar to Hershey, this stock is a good example of trending stocks in a volatile market. We have this stock in our portfolio and will continue to update our Phoenix members on further opportunities in a stock with a history of strong trends.

Packaging Corporation of America - PKG

A stock that has clear periods of price trends, but also deep pullbacks. For that reason, this stock is not high on our watchlist. Price broke out above last year’s high at $157 in April, but the momentum couldn’t be sustained. May is displaying an indecision candle.

On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Candles for the past three weeks have displayed indecision.

On the daily time frame below, price is above the 20, 50 and 200 SMA. Since price broke out, it has used the 20 SMA as support; however, price has yet to demonstrate momentum. The Sublime trend filter is green. We will wait to assess whether momentum can build and a trend emerges. We will update our Phoenix community if a trend forms.

W.R. Berkley Corporation - WRB

WRB is a stock that has been in a long term trend, but the quality of the trend hasn’t 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 25%.

On the weekly time frame, the Sublime trend filter is green. Price has shown strength over the past eight 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 continued to demonstrate volatility. However, we are actively looking for opportunities and sharing these with our Phoenix community.

To get up to speed on how to accurately analyse the markets, consider completing the ‘Are You On Track To Retire Wealthy’ scorecard and unlock your FREE gift – Lifetime access to the Launchpad Investor Starter Kit priced at £297 (+ VAT). 

Keep it simple. Keep it Sublime.

The ST Team


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