Pullbacks in the market separate those who can from those who can’t. They can make grown-ups weak and will highlight the holes and weaknesses in your knowledge and process.
Good investors understand that pullbacks are part and parcel of the process. They are not only expected but embraced as they offer entry points, either through breakouts or through pullbacks at key support and resistance levels.
- The S&P 500 had moved over 5% since the breakout and was due to correct.
- The Nasdaq 100 had just broken out to print new ATHs, and so a pullback to retest resistance-turned-support is a given.
- The Dow Jones 30 had moved circa 3% since the breakout and would naturally pull back in line with the above two indices.
- The FTSE 100 is trading between key levels of resistance and support above and below price. A battle between the bulls and the bears was also a given.
What is the best course of action during pullback? To stand aside and apply patience.
In an online world where people are blinded by the promises of quick riches, applying patience is one of the most challenging skills to master. It is a skill that is very handsomely rewarded when embraced and executed correctly.
The reality is, the less you do, the more you make. When the penny drops, and instead of chasing quick wins, you hold positions and compound, your results will change dramatically.
So with that said, let’s get into this week’s newsletter and catch up on the pullbacks of this week!
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.
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
US Stocks
- Ashtead Group – AHT
- Alliance Trust – ATST
- Howden Joinery Group – HWDN
- Accenture – ACN
- Berkshire Hathaway – BRK.B
- CubeSmart – CUBE
- Extra Storage Space – EXR
- Kansas City Southern – KSU
- Life Storage – LSI
- Starbucks – SBUX
FTSE 100
We expected price to pull back this week for 2 reasons. One, price had cleared a level of major resistance in the form of the previous high of 2021 from January. Two, price was faced with the next major resistance zone made up of the 7000 round number and the weekly 200sma. Price is now trading between key levels of support and resistance meaning we require a breakout. As the trend has been bullish since March of last year and we have been buying into stocks, we favour a breakout to the upside.
The sublime trend filter remains green on the weekly timeframe above the 50sma but as already mentioned, we require price to clear immediate resistance.
On the daily timeframe below, price is trading above the 20sma, the 50sma and the 200sma and the Sublime trend filter is green. This week’s pullback came to the 20sma which is often the first level of support during a decline. Patience is being applied as we wait for price to dictate the next breakout and a bull trend continuation.
UK STOCKS
Ashtead Group – AHT
Price goes from strength to strength with yet another breakout and a move of 8.5% so far this month. Price has now moved circa 56% since the breakout last year and an excellent example of why you want to enter into trends at the base of the breakout from consolidation.
On the weekly timeframe, price continues to trade above the 50sma and the 200sma. The Sublime trend filter remains green.
On the daily timeframe below, price continues to trade above the 20sma, the 50sma and the 200sma with all 3 MAs angling up, confirming a bull trend. Price has predominantly been using the 20sma as support which is an indication of a linear trend. This stock has been in a consistent trend for five months, so we may see a correction form, but until then, our Phoenix members will continue to manage their positions which are performing well, and we will continue to share signals with them.
Alliance Trust – ATST
Since the start of the month, a move of over 4.5% has seen price push to new ATHs and towards the £10 round number where it is finding immediate resistance.
On the weekly timeframe, price continues to trade above the 50sma and the 200sma. The Sublime trend filter remains green.
On the daily timeframe below, price is trading above the 20sma, the 50sma and the 200sma. The sublime trend filter is green, confirming the emergence of a bull trend from consolidation, first from January last year and second from November last year. This week’s pullback saw price drop to the 20sma confirming how this is often the first level of support in a pullback. A recovery is currently in play but it is a break and close above the £10 round number that we need before we start sharing signals with our Phoenix members. The start of a trend is where you always want to enter in on.
Howden Joinery Group – HWDN
A move of almost 10% since the start of the month has seen price move out of consolidation, above the high of last year and onto new ATHs.
On the weekly timeframe, price continues to trade above the 50sma and the 200sma. The Sublime trend filter remains green.
On the daily timeframe below, price is trading above the 20sma, the 50sma and the 200sma, and the Sublime trend filter is green confirming the emergence of a bull trend from consolidation. This week has seen the first pullback since breaking out from consolidation. Price is finding support around £8. Any further weakness and the 20sma will be the next area of support. A confirmed bull flag will offer an entry point at the base of the trend and when we will start sharing signals with our Phoenix members. As a reminder, the entry is important, but the exit is far more critical so just jumping in without a thoroughly thought out game plan is how losses occur.
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
As price started pulling back this week, the question was how far was price going to pull back. There has been no retest of the $4000 round number since price cleared this major resistance level. Ideally, we do not want price to drop this far, but price does what it does, and we have to react accordingly.
On the weekly timeframe, price continues to trade above the 50sma and the 200sma. The Sublime trend filter remains green.
On the daily timeframe below, price continues to trade above the 20sma, the 50sma and the 200sma with all 3 MAs angling up, confirming a bull trend is still very much in play and has been since 2009. The pullback of this week seems to be holding above the 20sma. Being a Friday, we could potentially see further weakness as Friday is synonymous with profit-taking. We patiently wait for price to dictate the next breakout. We continue to monitor bullish stocks.
US STOCKS
Accenture – ACN
April has so far seen a move of over 3.5% and counting. At the time of writing, price is just under 100 points away from reaching the $300 round number. If it can clear this level, there will be enough room for a solid trend to develop through to the next round number which is $400.
The weekly timeframe continues to trade above the 50sma and the 200sma. The Sublime trend filter remains green.
The trend on the daily timeframe is starting to take shape as we see the potential for a linear trend to evolve. Price broke out from a period of consolidation, which went on from December 17th 2020 to March 26th 2021 before price broke out with force with a bar ranging over 1200 points. The last contact price made with either the 20sma or the 50sma was on March 10 2021 so we may be due a pullback in the next few days and weeks. As long as the bars remain green, we should continue to see price trend towards $300 and beyond.
Berkshire Hathaway – BRK.B
April has seen good growth in this stock’s share price, with a move of 5.3% so far, creating new ATHs. Price broke out of consolidation and above last year’s high back in February and has continued to trend to the upside.
The weekly trend filter is green and price is quite some distance above the 50sma and the 200sma.
Price is in a nice and steady trend and offered the Phoenix members a PB opportunity in March, which is now in profit. Price is above the 20sma, the 50sma and the 200sma, with all 3 MAs angling up. The recent PB was quite deep and took price 25 trading days to break back above the high, so this stock will require some patience if a position is taken. This stock does trend consistently over time so it should deliver good profit over the long term offering opportunities to compound along the way.
CubeSmart – CUBE
CubeSmart has seen really good growth in April so far, with a move up just over 9%, taking out the $40 RN in the process.
The weekly timeframe has seen consistent green bullish candles over the last few weeks and looks likely to end this week bullish as well. The bars are above the 50sma and the 200sma.
The daily trend filter is green and price is above the 20sma, 50sma, and the 200sma. After breaking above major resistance at $36 in February 2021, price formed an area of consolidation between $39 and $36 and then broke the resistance level. Price is now developing into a potential long-term linear trend which it has also achieved in the past, increasing the likelihood of this occurring during the current trend.
Extra Space Storage – EXR
Extra Space Storage is one of a number of storage companies in the US that is performing well. April has seen a rise of 10.2% and is now edging closer to the $150 RN.
The weekly timeframe shows a strong trend is in play and the trend filter is green and price is above the 50sma and the 200sma.
A linear trend is forming on the daily timeframe and price is above the 20sma, 50sma and the 200sma. The recent PB in March saw price bounce off the 20sma and has formed a clean move to the upside since. We are due a PB but the 20sma and the 50sma should hold as support. We now need to see price move above $150 and continue to form higher highs and higher lows. Earnings are approaching in a few days which may cause a PB to form or it may be that boost price needs to continue its ascent.
Kansas City Southern – KSU
March saw a huge move to the upside of 23% and so far in April we are seeing a movement of 12%, continuing the momentum from the previous month. The $300 RN is just above price, which may act as a strong level of resistance.
The weekly shows that the bulk of this month’s move occurred this week. The trend filter is green and price is above the 50sma and the 200sma.
The daily timeframe below shows a clearer picture of price activity. We can see that the strong move in March had a lot to do with the gap up on March 22nd. This week’s gap on April 20th has also played a part in the strong move we are seeing this month. Price is quite volatile at the moment but working in favour of the bullish investors, and if the volatility continues, then we should see price take out the $300 RN and rise beyond this level.
Life Storage – LSI
This stock has moved up almost 10% this month and has the major $100 RN resistance level above which may cause price to struggle.
The weekly is bullish and the trend filter is green and price is above the 50sma and the 200sma.
The daily is seeing a nice trend form which is using the 20sma and the 50sma as support. Price is above all the MAs including the 200sma. This stock has trended well long-term in the past and should continue to do so going forward. What we are now waiting for price to break above $100 and when that happens, we need to ensure it is not a fake breakout so we will wait for another breakout before considering any long positions.
Starbucks – SBUX
Price has now moved further away from last year’s high at $107 and is up by 6.7% so far this month. The next round number is at $150 which is some distance away. This stock is now providing enough room for a trend to develop and plenty of opportunity to compound.
The current weekly candle is bearish but the trend filter is green and price is above the 50sma and the 200sma.
A trend is starting to form on the daily timeframe and price is currently pulling back. Price is above the 20sma, 50sma and the 200sma and the trend filter is green. The 20sma or the 50sma should hold price up if these support levels are hit. This stock has performed well since breaking above previous major resistance at $100 and we should see a trend lasting several months and potentially over a year as long as price continues to form higher highs and higher lows.
The end of the week appears like the market will close at support and if these levels hold strong, we should see a continuation of the overall bull market. Keep up to date with market events by joining our FREE Launchpad Facebook group.
Keep it simple. Keep it Sublime.
The ST Team
