Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
This week we have seen continuing momentum in the markets, resulting in the main US indices trading above the 200 Simple Moving Average (SMA); a major technical level. We will now apply patience, to assess whether this level acts as support or resistance. Support would see a continuation pattern above this level, whilst resistance would see price fail and close back below this level.
Often traders and investors base decisions on major market direction using one bar on a higher time frame, or a short time frame such as an hourly chart. At Sublime Trading we see patience as one of the key skills to successful trading. Continuation patterns are one of our arsenal that ensures we time the market, further adding to our ‘edge’.
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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Let’s get into this week’s newsletter.
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 filter turned from grey to green. Our overall bias remains bullish, however, we are standing aside until market direction becomes clearer.
UK STOCKS
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 8.6%.
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 maintained its green status, the first time since January this year. 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.
RELX - REL
A stock that is in an overall uptrend since August 2012, however, like many stocks, has had a volatile start to 2022. Indecision 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 above the 50 and 200 SMA, and the Sublime trend filter is green.
On the daily time frame below, price is also trading above the 20, 50 and 200 SMAThe Sublime trend filter is green. Between 8 – 14 March price used a major pivot level at £21 as support, subsequently gaining 13%. We will monitor this stock and update our Phoenix community members if a trend forms above the current all-time high at £24.51.
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 8.3%.
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 filter this week switched from grey to green. Price is trading above all moving averages; 20, 50 and 200 SMA; importantly, this week the 20 SMA crossed 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 4.0%, 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. This week price is currently displaying an indecision candle. 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. Recently, price has shown strength, and is now trading above all moving averages, however, the averages are not aligned. The pattern of lower highs and lower lows mentioned previously 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 5.9%.
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 remained green.
On the daily time frame below, price strength has continued this week, resulting in the Sublime trend filter turning from grey to green. Price is trading above the 20, 50 and 200 SMA. With price in close proximity to the all-time high, we will monitor this stock. 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 $165, confirming the breakout from December last year. March to date is displaying a gain of 9.7%.
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.
Arthur J. Gallagher - AJG
This is a stock that has a history of long term trends. Price created an all-time high in December at $171, however, like most stocks, price has displayed weakness in January with a 6.9% decline. Strength returned in March with a 10.4% gain to date.
On the weekly time frame, price continues to trade above 200 SMA. This week the Sublime trend filter switched from grey to green.
On the daily time frame below, this week price broke out to create a new all-time high at $177. The Sublime trend filter is green. We will monitor this stock to assess whether a trend can form following this breakout. We will update our Phoenix members 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 $362.
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 $139.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. This week price is displaying an indecision candle, after last week’s momentum following the 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.
Extra Space Storage - EXR
Extra Space Storage is a stock that we traded in our Phoenix community throughout 2021. Price created an all-time high in December last year at $229, and subsequently declined in the first quarter of 2022. Weakness in January and February has been met with strength in MArch, with a gain of 9.3%.
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, as mentioned with other stocks, price suffered during January and February. Price is trading above all moving averages; 20, 50 and 200 SMA. Importantly, this week the 20 SMA crossed the 50 SMA, and the moving averages are now aligned. The Sublime trend filter is green. Phoenix members will again be carefully monitoring this stock, to assess how price responds. A continuation pattern above the current level could offer another opportunity in this trending stock.
Public Storage - PSA
A storage company in a strong trend. Price created an all-time high at £377 on 31 December, before going into a period of consolidation until this week. Price action in March has been particularly bullish with a 10% gain.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Since the breakout from consolidation in April last year, price retested a major pivot level at $267 and has since moved higher, gaining 46%.
On the daily time frame, price is above the 20, 50 and 200 SMA. The Sublime trend filter is green, and price is looking particularly bullish. Looking ahead, a continuation above the $400 round number could offer an opportunity in this very bullish stock. We will share any appropriate breakout and pullback signals with our Phoenix community.
This week the markets have displayed further 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
