Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
This year has started with significant volatility in the stock markets throughout the world. Various factors are driving these events; however, as investors following the principles of trend trading, we are aware of them, but we don’t use events to guide our trading.
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.
In addition to publications such as 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
On the monthly time frame, the strength displayed in December initially continued into 2022, however, weakened this month. March was a volatile month, with initial weakness matched by latter strength, resulting in a very large wick forming below price. By comparison, April has shown modest strength, with a gain to date of 1.5%.
On the weekly time frame, the Sublime trend filter is green. Price is trading above both the 50 and 200 SMA. Recent strength has pushed price up, close to a key pivot level at 7692.
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. In this shortened trading week price was in a tight range. Our overall bias remains bullish, however, we are standing aside until the market direction becomes clearer.
3I Infrastructure – 3IN
A stock that originally floated in March 2007, price lacked any clear direction until October 2014; price then formed a strong trend until the pandemic in March 2020. On the monthly time frame, in recent months price action has been mixed, however, in April the bulls have stepped in and strength has resumed, resulting in a gain to date of 3.2%.
On the daily time frame below, this week’s price initially showed strength to create an all-time high but weakened as the week progressed. The Sublime trend filter is currently green, and price is trading above the 20, 50 and 200 SMA. We will monitor this stock to assess whether the recent momentum can be sustained, and we will update our Phoenix members accordingly.
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 indecision with a 1.5% gain to date.
On the weekly time frame, price is trading at the 50 SMA and above the 200 SMA; the Sublime trend filter is green.
Whilst price is showing modest strength on the monthly time frame, on the daily time frame below, weakness this week resulted in price retreating to the 20 SMA. The Sublime trend filter remains green. 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.
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, the bulls have stepped in, resulting in a 4.5% gain in March, followed by a modest gain to date in April of 0.7%.
On the daily time frame below, price is also trading above the 20, 50 and 200 SMA. The Sublime trend filter is green. In early March price used a major pivot level at £21 as support, subsequently gaining 14%. We will monitor this stock and update our Phoenix community members if a trend forms above the current all-time high at £24.51.
The year started with weakness in the S&P 500, with a decline to date of 8.4%. 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 the 50 SMA but remains above the 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. Our view is that the long term bull trend from 2008 remains intact.
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%, whilst April is currently also displaying a gain of 6.7%.
On the daily time frame below, the Sublime trend filter is green, and price is trading above the 20, 50 and 200 SMA. This stock is evidence that select stocks are performing well, despite broad market volatility. We will monitor this stock and update our Phoenix community accordingly.
Assurant - AIZ
The next US stock is Assurant. On the monthly time frame, price has been bullish overall since November 2008 and is currently trading above last year’s high of $172.
On the weekly time frame, the Sublime trend filter is green and price is above the 50 and 200 SMA. Price broke above the Piv21 level which was at $172 this week.
On the daily time frame below, the Sublime trend filter is green and price is above the 20, 50 and 200 SMA. As mentioned above, the recent breakout could see this stock move higher. Given the general pattern of deeper-than-ideal pullbacks, this stock is not top of our list, but we will continue to monitor it and update our Phoenix community accordingly.
Deere & Co - DE
We last wrote about this stock in August 2020. At the time price had just broken above $200. Price went on to gain 83%, in a trend lasting until March 2021. Price subsequently went into a long period of consolidation, before breaking out last month. The breakout has been confirmed with a gain in April of 2.1%, albeit price action is not yet as convincing as we would like to see.
On the daily time frame below, the breakout on 17 March was followed up by a pullback to the 20 SMA and confluence of a pivot level at $400. The moving averages are currently aligned and price this week again pulled back to the 20 SMA. The Sublime trend filter is green. The bias of this stock is bullish and we will await a break out above the current all-time high before considering further positions, which we will share with our Phoenix members.
Dollar General - DG
A stock that has has 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 daily time frame below, price is above the 20, 50 and 200 SMA, however, the moving averages are not fully aligned, with the 50 SMA below the 200 SMA. The Sublime trend filter is green. This week’s price made an all-time high above the $250 minor round number. 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 on 28 April, 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 94%.
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 20, 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 of 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 31%.
On the weekly time frame, the Sublime trend filter is green. Price has shown strength over the past seven 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