A mixed week of bullish and bearish activity in the stock market as price remains inside an area of consolidation. Given the bullish moves of March and April, a period of correction was expected. 

This is when most will panic, often as they lack a process and alignment with the natural movement to price. Good investors simply look to support levels where the declines will find exhaustion.

Looking at the indices:

  • The S&P 500 found support at the daily 50sma.
  • The Nasdaq found support at the high of last year.
  • The Dow 30 found support at the daily 50sma.
  • The FTSE 100 found support at the high of January 2021. 

We have since seen a bounce and a move back to the upside with a recovery of between 2% and 5% depending on which of the indices you look at. What is common is that we need to see breakouts across the board for price to confirm a continuation of the bull trend. This is where patience comes in. 

The trend is your friend until the bend at the end. There is little to suggest that a bend is near and that current market moves are simply pullbacks in a bull trend. If you are emotionally invested in any of the assets in your portfolio, you will find yourself breaking rules, which will lead to uncapped losses and capped profit long term.

Good investors reverse that process by staying detached. This leads to small and insignificant losses and large life-changing uncapped profit by holding and compounding. 

We continue to hold a number of stocks in our portfolio, which we will add to on the next round of breakouts. New stocks are presenting themselves, which allows us to diversify further.

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

FTSE 100

Little change from last week with price still forming an indecision candle on the monthly timeframe. The 2015 Piv9 level continues to hold strong as resistance whilst the weekly 200sma holds strong as support with the 7000 round number sandwiched between these two key levels. There is little surprise that price is currently finding comfort in this zonal area.

On the weekly timeframe, the Sublime trend filter continues to remain green.

On the daily timeframe below, we can see the consolidation price has been in this week, using the high of January of this year as support. The Sublime trend filter has been alternating between green and grey, confirming a mini area of consolidation. Price has dipped below the 20sma this week but remains above the 50sma, also immediate support, and the 200sma. Our bias overall remains bullish, and we continue to look for stocks outperforming the index.

UK STOCKS

Croda International - CRDA

A stock we have been in since last year but that has been trading inside a prolonged area of consolidation since October. This week has seen bullishness, with price now pushing back towards the current ATH.

On the weekly timeframe, price is trading above the 50sma, and the 200sma and the Sublime trend filter has remained green through consolidation, confirming that our bias has to have remained bullish throughout this period.

On the daily timeframe below, price closed back above the 20sma on Thursday following a gap up at the start of the day followed by good bullish momentum. The 50sma and the 200sma are angling confirming bullishness. We have to apply some patience with this stock. Once in a stock, what happens next is beyond our control. It is commonplace for a stock to trend well when first triggered in but then start consolidating. However, consolidations act as an excellent base for a trend to develop and the next leg up in this case. The longer the consolidation, the bigger the breakout as the expression goes. We will continue to share signals with our Phoenix members if and when price breaks out above the £70 round number.

Breedon Group - BREE

This month’s move of over 11% has taken price out of consolidation it has been in since 2017, above the high of last year and onto new ATHs. Price is now also trading above the £1 round number. We do not trade stocks below £1. The history shows that this stock can trend, but it has been choppy. It will be interesting to see how the trend reveals itself going forward now that it is above £1.

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

On the daily timeframe below, price is trading above the 20sma, the 50sma and the 200sma and the Sublime trend filter is also green. The daily and weekly are aligned. We have started sharing signals with our Phoenix members. Despite its history, this stock has good upside potential, with the next key level of resistance above price being the £10 round number.

 

Big Yellow Group - BYG

A move of almost 13% so far this month has taken price out of consolidation it had been in since February last year and onto new ATHs. Price is now likely to target the £20 round number. The history shows this stock does trend, but it can swing and create deeper than desired pullbacks. 

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

On the daily timeframe below, price is trading above the 20sma, the 50sma and the 200sma and the Sublime trend filter is also green. The daily and weekly are aligned. As price has only just broken out from consolidation, we are applying patience, for now, waiting for price to confirm a bull trend continuation before sharing signals with our Phoenix members. This is a stock to watch but not one that is high on our watchlist for now, given its history of performance.

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

During the earlier part of the month, price experienced a 3.2% decline, but price has since recovered and is now just 0.72% below the open for the month. The strength at the moment lies with the bulls who still have time before the end of the month to force price to climb higher. Price has remained above $4000 following the break of that level last month and we now want to see it ascend towards $5000.

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

The daily continues to trend well, using the 20sma and the 50sma as support along the way up. Price is also above the 200sma. The recent PB has hit the 50sma and we have since seen a bounce up to the 20sma. We now need to see price move above the 20sma and then go on to create new ATHs above $4328, which is the high made on May 7th 2021.

US STOCKS

Allstate - ALL

The monthly is already up 7.1% so far this month and still climbing. There have been several long-term linear trends since this stock first floated on the market back in 1993. With such a strong past, we can expect linear trends going forward.

The Sublime trend filter on the weekly timeframe is green and has formed bullish candles above the 50sma and the 200sma. This week’s candle, however, is currently bearish.

Price so far is forming a neat move to the upside since breaking above the consolidation zone resistance level at $125 last month. The Sublime trend filter is green, and price is above the 20sma, the 50sma and the 200sma. A pullback is in play, and we may see price come down to make contact with the 20sma as this is the closest support level to price. To confirm a linear trend, we need to see the bars remain green and price use the 20sma as support. We will share both pullback and breakout signals with Phoenix members as the trend develops.

Brookfield Asset Management - BAM

This stock has performed well this month, with price currently up 8% this month. The history of this stock looks promising as there are several strong trends in its past where price has trended for consecutive years.

Price is above the 50sma, and the 200sma on the weekly timeframe and the Sublime trend filter is green. The current candle is bullish at the time of writing.

The daily timeframe below shows price trading out of consolidation and above the 20sma, the 50sma and the 200sma. The Sublime trend filter is green. This is a cheap stock at just under $50 with good upside potential given its history. We will apply patience for now and wait for our trading plan to be met above $50 before sharing signals with our Phoenix members.

Berkshire Hathaway - BRK.B

The monthly time displays a clear bullish trend in play, and May’s candle is up 4.2% and might close higher if price recovers from the recent PB.

The Sublime trend filter is green on the weekly timeframe, and price is trending above the 50sma and the 200sma.

The daily timeframe below shows a clean trend in play which began in February this year. The trend has allowed us to enter with BO and PB positions, and the Sublime trend filter has remained green for the duration of the trend. Price is currently in a mini consolidation just above the 20sma support area. Price is also above the 50sma and the 200sma. The $300 RN is above price and could act as a strong level of resistance.

Crown Castle International - CCI

A stock that has moved a whopping circa 14,500% since the low in 2002 at $1 to the current high at $190. There have been periods where price has trended quite well, but also the trend structure has also been choppy in parts. This stock has not always been the smoothest but investors have been well rewarded over the long term. April saw price move around 10% taking price out of consolidation and onto new ATHs. May has seen the expected pullback to retest the high of last year as resistance-turned-support.

On the weekly timeframe, price is trading above the 50sma and the 200sma and the Sublime trend filter is green, confirming the start of the next leg up.

On the daily timeframe below, Thursday’s bar closed above the 20sma, the 50sma and the 200sma and the Sublime trend filter is green. The daily and weekly are aligned. The next breakout will be a sign of a push towards $200. However, a break and close above $200 will be significant for further strength. How aggressive or conservative you are will determine when you enter.

Deere & Co - DE

Since the breakout above $200 in August of last year, a stock that has been in our portfolio has moved circa 130% to the high of this month. Price is now trading inside a needed area of consolidation.

On the weekly timeframe, price is trading above the 50sma and the 200sma and the Sublime trend filter has remained green throughout consolidation.

On the daily timeframe below, the pullback and the gap down of this week has taken price below the 20sma and the 50sma. Price, however, is finding support at the $350 round number. Patience is needed now on this stock as price continues through this sideways market. The overall bias of the market is still bullish, and we will just hold the multiple positions we have in play. A break and close above $400 is when we will continue to share signals with our Phoenix members.

Fortinet - FTNT

This stock is a top past performer for us and is currently moving well for investors. The trend started in February this year having moved almost 40%. Price is so far is up 4% for this month.

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

The daily timeframe below shows a strong trend is in play. The structure of the trend is made up of pullbacks which have found support between the 20sma and the 50sma along the way up. The recent pullback found support at the MAs and around the $200 RN. Price remains above the 20sma, the 50sma and the 200sma and is close to breaking out. If a breakout occurs, it will provide us with a signal to go long, which we will share with our Phoenix members to compound our positions.

Hershey Company - HSY

The monthly candle has made good progress this month with a move up now of 5.3%. We expected a strong move following a BO from long-term consolidation which lasted from September 2019 to April 2021.

On the weekly timeframe, price continues to trade above the 50sma, and the 200sma and 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. The daily and the weekly are aligned, confirming the trend in play since the breakout from consolidation. Price is now likely to make its way towards the $200 RN

The market has recovered well but we wait to see how the markets close on Friday to make a more informed decision on when breakouts on the indices may occur. Stay up to date with market events by joining our FREE Launchpad Facebook group.

Keep it simple. Keep it Sublime.

The ST Team


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