Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
This week we have continued to see volatility in the markets.
However, savvy investors, such as those that are part of our educated Phoenix community, understand the importance of timing the market. Whilst we remain vigilant and continue to practise our process of scanning the markets, we don’t attempt to trade volatility, nor add to existing positions on reducing asset prices, known as ‘averaging down’.
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.
As we mentioned last week, 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!
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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, 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. April is currently displaying indecision.
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 green. Our overall bias remains bullish, however, we are standing aside until the 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 displayed strength with an 8.6% gain, but that has been pared back in part with a 5.1% reduction to date in April.
On the weekly time frame, price is trading above the 50 and 200 SMA, and the Sublime trend filter is grey.
On the daily time frame below, as mentioned, this year commenced with weakness resulting in price trading below all moving averages. However, in March the bulls stepped in and pushed price back up. Price is trading below all moving averages following weakness this week. As a result, the Sublime trend filter is red. 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.
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 is displaying signs of bullishness with a 3.3% gain to date.
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 price broke above last year’s high at £10.93, price has shown strength, gaining 11.8%. The monthly candle is currently displaying strength, with a gain to date of 4.5%.
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 all SMAs; 20, 50 and 200 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.
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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 to date in April.
On the weekly time frame, price is trading back below all moving averages; 20, 50 and 200 SMA. The Sublime trend filter is grey. 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 trends and long periods of weakness. After the recent all-time high, this week price has weakened. As a result, the monthly 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, 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 gain of 2.0% and a large wick above 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, the Sublime trend filter is green, and price is trading below the 20 SMA, and above the 50 and 200 SMA. The next area of resistance is the $200 round number. 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 months, 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 in March of $362. Price in April has been weak, resulting in a 6% decline to date.
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 found strength.
The daily time frame below shows an impulsive move since price bounced off the 200 SMA in early December. Price is currently trading below the 20 and 50 SMA, but, importantly above the 200 SMA. The Sublime trend filter is red. The longer the consolidation, the larger the breakout. With price breaking out from consolidation going back to May last year, we anticipate a continuation of the trend that commenced in February last year. We will update our Phoenix community on further opportunities in this trending stock.
Dollar General - DG
A stock that has had a very steady rise from its IPO price of around $20 to just over $250 today, a rise of over 980%. The stock does trend well but is prone to deep pullbacks along the way, particularly at key round number levels.
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 above the 20, 50 and 200 SMA, however, until this week the moving averages were not fully aligned – with the 50 SMA now crossing the 200 SMA. The Sublime trend filter is green. This week price pulled back to the 20 SMA. We will wait to assess whether this level holds as support. We will update our Phoenix community if a continuation pattern forms above this level.
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 28%.
On the weekly time frame, price continues to trade above the 50 and 200 SMA, and the Sublime trend filter remains green.
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. With earnings this week 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 88%.
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, and trading above the 50 and 200 SMA. 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.
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 29%.
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.
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Keep it simple. Keep it Sublime.
The ST Team
