Sublime trading

A week of pullbacks in the market pushing stocks to key support levels, one of the more aggressive declines on stocks since the recovery from CV19.

The reality is we never know when pullbacks will come in and how deep they will be which is why it is essential to have a process that simultaneously maximises the upside and protects the downside.

During these pullbacks and corrections, positions will stop out but positions will also survive. We simply cut out of losing positions and hold onto those that form a base and then eventually breakout in the direction of the overall bullish trend offering further compounding opportunities.

Now, of course, this is easier said than done but which is why good investing/trading is simple but not easy. The best techniques are simple to learn but extracting profit is not easy. It takes time, patience and resilience. Even with the right process, it takes time to execute it in a way that it becomes a mechanical process. Too many give up before they have even started. Wealth is earned and not bestowed.

Staying calm is essential as is being surrounded by the right people and support. Avoid being around the noise and meme culture. This is about long-term wealth creation where the level headed and the savvy are rewarded.

The FREE Facebook Community called the Launchpad is a great place to get involved in conversations around stocks mentioned in this newsletter and opportunities that may arise during the week.

So having said that, let’s get into this week’s newsletter…

Here is 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

  • Allianz Technology Trust – ATT
  • Polar Capital Technology Trust – PCT
  • Scottish Mortgage Investment Trust – SMT

US Stocks

  • Aptiv – APTV
  • Broadridge Financial Solution – BR
  • Cadence Design Systems – CDNS
  • Comcast – CMCSA
  • Deere & Co – DE
  • Starbucks – SBUX
  • Take-Two Interactive Software – TTWO

FTSE 100

Little change on the FTSE 100 with price remaining inside consolidation it has been in since January and still finding support at the Piv9 level of 2018. March currently looks bullish with a move of around 3% from the low at the time of writing.

There is no change on the weekly with price still trading between the 50sma as support and the 200sma as resistance and the Sublime trend filter remains green.

There is no change on the daily time frame below either with the Sublime trend filter remaining grey confirming a consolidation. Price is finding immediate support at the 20sma and the 50sma and continues to remain above the 200sma. Our stance overall remains bullish through this current correction in the market.

The UK stocks that have made it onto this week’s newsletter are: (click on charts to open in a new window)

UK STOCKS

Allianz Technology Trust – ATT

Price had moved around 65% from the breakout in May last year above £20 through to the high of February at £33. Since then, the correction has come in at around 20% so far.

On the weekly timeframe, the pullback has taken price to the 50sma and the Sublime trend filter has turned grey for the first time since April 2020. Price continues to remain above the 200sma.

On the daily timeframe below, price has pulled back to the daily 200sma for the first time since the drop in price in February last year when the fear around CV19 first hit the markets. A close above the 200sma by the end of trading on Friday will be preferable for a recovery back to the upside. The Sublime trend fitler is currently red suggesting short-term weakness for now. A move back above the 20sma and the 50sma is needed for price to break out and create new ATHs.

Polar Capital Technology Trust – PCT

A bumpy year for this stock from February 2020 to February 2021 starting with a 36% decline until March 2020 followed by a 115% rise until the high of February followed by a 12% correction. The trend between this time showed signs of promise but since July, this has been a trend structure made of deep swings as seen below.

On the weekly timeframe, price has pulled back to the 50sma for the first time since February 2020 where it is finding immediate support. The Sublime trend filter has turned grey confirming a pullback but not a bear reversal. Price continues to remain above the 200sma.

On the daily timeframe below, price has pulled back to the 200sma, trading below it on Friday this week but finding support at key level from November 2020. A move back above the 200sma and certainly the 50sma and the 20sma will suggest further strength back to the current ATH. The Sublime trend filter is currently red but the bigger picture shows price alternating between red, grey and green confirming a consolidation for now and not a bear trend.

Scottish Mortgage Investment Trust – SMT

A move of almost 120% from the breakout from consolidation in April 2020 at just under £7 to the high of February of just over £14 will at some point lead to a correction and that is what we are currently seeing. Price since the high of February has dropped around 25% which is a pretty deep correction in itself but not one to be considered a top just as yet. With swift moves up, there will be swift moves down and this is what we are seeing. Different traders will manage their positions differently with some still keeping positions open for when the recovery comes in.

On the weekly timeframe, the trend filter is still green and trading above the 50sma and the 200sma.

On the daily timeframe below, the pullback has taken price back to the 200sma which is also just short of the major £10 round number. This zonal area is likely to hold strong and push price back up to the current ATH.

YES, I Want Access To The Monthly Top Stocks!

Now is the perfect time to start preparing for when stocks do make a move. A recovery in this index will mean we can start looking to place long trades. Further declines and we can start looking to short stocks like we did back in 2008.

The market is poised to hand out some unique opportunities for excellent profit and growth for those who have learned to position themselves correctly.

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 pullback from mid-February has continued this week despite a bullish start to the week seeing price decline by around 4.5% since the high of last month. Price is now finding support at the high of 2020 which is a key level that we want to see hold strong. Indeed, the Nasdaq and the Dow Jones also find themselves at key support which we would like to see price bounce off and move back to the upside.

Little change on the weekly timeframe with price trading above the 50sma and the 200sma and the Sublime trend filter is green.

On the daily timeframe below, the pullback has taken price below the 50sma which is not ideal but this can and will happen during periods of correction. The Sublime trend filter is grey confirming a pullback for now. Our overall bias continues to remain bullish with price trading above the 200sma. A close above the high of 2020 by the end of trading on Friday will be a sign that support is holding strong.

US STOCKS

Aptiv – APTV

Price has moved 54% from $100 to $160 since the breakout in November 2020. The correction this month has been less than 10% from the high and with price being around the $150 round number, a correction at this level is not unexpected.

On the weekly timeframe, price continues to trade above the 50sma and the 200sma and the trend filter is green still confirming bullishness.

On the daily timeframe below, the drop in price on Thursday this week took price below the 20sma but found support at the 50sma. Price remains above the 200sma. Overall, price finds itself inside an area of consolidation as confirmed by the grey Sublime trend filter but in an overall bull trend. We must now wait to see how price closes by the end of trading on Friday but with the overall trend being bullish we favour a breakout the upside.

Broadridge Financial Solution – BR

A stock that has an excellent history of performance but is currently just struggling to gain momentum to the upside. A 535% move to the upside from 2013 from $25 to $160 shows that this stock will move once it gets going. Price currently finds itself stuck between the high of last year as resistance and the precious ATH of 2018 as support having declined by around 12% since the high of January.

The weekly timeframe overall remains bullish with price still trading above the 50sma and the 200sma and the Sublime trend filter remaining green.

On the daily timeframe below, the pullback has taken price below the 20sma and the 50sma and back to the 200sma where it is currently finding support. The trend fitler is currently red confirming weakness but the bigger picture shows price alternating between red, grey and green confirming a sideways market for now. We now need to see how price closes on Friday in relation to the daily 200sma.

Cadence Design Systems – CDNS

A stock that covered ground swiftly between $80 where it broke out last year in April and $150, the high of last month, a move of 86%. After every move, the market consolidates which is a natural feature to price. The decline of 13% this month has so far kept price inside consolidation.

On the weekly timeframe, the Sublime trend filter is still green and price continues to trade above the 50sma and the 200sma confirming overall that price is remaining bullish.

On the daily timeframe below, the decline of this week has taken price below the 20sma and the 50sma but finding support at a previous resistance level from November. The trend filter is yet to turn red and has been altering between green and grey since December confirming a consolidation. We would like to see price close above the consolidation support by the end of trading on Friday and form a base that will push price back up and onto new ATHs.

YES, Let me watch now!

Comcast – CMCSA

One of the newest stocks shared with our Phoenix members this week with price breaking out of consolidation and printing new ATHs above $50. This is a stock trading above the high of last year, very good volume and a history of performance so a no-brainer for the portfolio.

On the weekly timeframe, the Sublime trend filter is green and price is trading above the 50sma and the 200sma confirming the start of a bull trend from consolidation.

We can see that in more detail on the daily below with price trading above the 20sma, the 50sma and the 200sma and the trend filter being green. This stock has also held well through this current correction remaining out of consolidation. If price can end the week out of consolidation then we are likely to see further moves to the upside and see price target the $100 round number.

Deere & Co – DE

A stock that has moved over 100% from the breakout in August 2020 from $180 to just over $360 this month before the 7% correction that has come in this week. This is the first red bar in that time. One simply cannot expect one green bar after another for the lifetime of a trend.

On the weekly timeframe, the Sublime trend filter is still green and price continues to trade above the 50sma and the 200sma confirming overall price remains bullish.

The daily timeframe below shows the pullback in price to the 20sma showing how well this stock at the time of writing is doing even through this current correction. A closer look at the trend structure shows that pullbacks to the 20sma and even the 50sma are not uncommon. The trend filter remains green with price trading above all 3 moving averages. It is now a waiting game to see how price closes the trading week on Friday but do not be surprised if price now moves into an area of consolidation before further strength to the upside towards $500.

Starbucks – SBUX

New ATHS in December with a move of around 9% to the upside. A decline of around 9% in January followed by an 11% rise in February and March so far has seen a decline of 5%. All this suggests is that price is inside an area of consolidation and we must apply patience until price breaks out.

On the weekly timeframe, the Sublime trend filter is still green and price continues to trade above the 50sma and the 200sma confirming overall that price is bullish and is looking to gather momentum to the upside and push price towards $150.

On the daily timeframe below, price is clearly in consolidation with the Sublime trend filter alternating mostly between green and grey with some red at the end of January into the start of February. Price is finding support at the 50sma and continues to trade above the 200sma so there is no reason to have any other stance other than bullish for now. How long price remains in consolidation before further strength and new ATHs is down to the forces of the market.

Take-Two Interactive Software – TTWO

A top-performing tech stock for us back in 2018 to 2018 that is currently not struggling to gain momentum to the upside inline with the overall sector. Tech stocks in general have moved at great speed since the recovery from CV19 that the sector was due a correction. Price has declined around 19% since the high of last month back to key support.

On the weekly timeframe, the Sublime trend filter is still green despite the pullback and price continues to trade above the 50sma and the 200sma confirming overall price remains bullish.

On the daily timeframe below, the pullback has taken price to below the 20sma and the 50sma to the 200sma where it is now finding support. The Sublime trend filter is currently red suggesting short-term weakness for now but the bigger picture shows price moving sideways. We need to wait to see how price ends the trading week on Friday but if price can remain above the 200sma then we are likely to see further strength to the upside.

After such a rocky week in the market, we need to let the dust settle to identify our next move. Pullbacks are a common part of investing and can not be avoided and the good thing about them is they provide further opportunities to profit from the market.

Stay alert and keep up to date with the markets in our FREE Launchpad Facebook group.

Keep it simple. Keep it Sublime.

The ST Team


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