Last week we relaunched our newsletter and the initial feedback has been very encouraging. As a recap, the newsletter has three sections; an overview of the main US and UK indices, a selected stock with deep analysis, and finally an analysis of an asset we have in our portfolio, including a discussion on the returns the asset is generating for our Phoenix members.
Let’s get into this week’s newsletter!
US & UK INDICES OVERVIEW
As mentioned last week, the three US indices – S&P 500, Nasdaq 100, and Dow Jones 30 – all peaked in early January and all have declined throughout 2022, by 19%, 30% and 16% respectively. All three indices are trading below the daily 200 simple moving average (SMA). May’s monthly candle for all indices is displaying weakness, with declines of 6% in the S&P 500 and Dow Jones 30, and a decline of 8% in the Nasdaq 100.
As mentioned last week, we are not currently considering short positions, as all indices are above the weekly 200 SMA. We should also be mindful that the indices are still trading above the pre-pandemic highs; indicating the strength of the bull run throughout 2020 and 2021. We believe the long term trend, which commenced in 2008, is the dominant market direction.
The FTSE 100, the UK index, has performed significantly better in 2022, being flat year to date. However, price action has been very volatile with price trading between 6788 and 7688 – a range of 13%. May’s monthly candle is currently showing a decline of 2% with a large wick below the price.
OUTPERFORMING STOCK FOR THE WATCHLIST
Cigna - CI
Cigna is a stock that has a history of trends, such as in 2013-2015 and 2017. Throughout 2022 this stock has significantly outperformed the US indices with a gain to date of 13%. May’s monthly candle is displaying strength with a gain to date of 5%.
On the weekly time frame, the price is trading above the 50 and 200 SMA, and the Sublime trend filter is green. Whilst on the daily time frame the Sublime trend filter is also green. Price is currently trading above all moving averages, which are all aligned. During 2022 price has been using the zonal area between the 20 and 50 SMA as support. This week price traded very close to the all-time high of $273.
Microsoft - MSFT
Microsoft is a stock with unparalleled performance, with a trend dating back to July 2016! During 2022 price has displayed weakness, falling 28% from its all-time high; however the price remains an incredible 80% above the pandemic low.
We first entered MSFT in August 2020 and have since compounded on multiple occasions. The total return to date exceeds 4% using a total risk of 2%. This stock is a good example of the value in selecting high performing stocks that have a history of long term trends. The total amount of time taken to set up and manage this trade has been less than two hours over nearly two years – this is the benefit of trend trading; using a higher time frame such as monthly and weekly charts avoids the noise and stress of shorter time frames.
This week the markets have continued to demonstrate volatility and weakness. However, we are actively looking for opportunities, and sharing these with our Phoenix community for good returns.
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Keep it simple. Keep it Sublime.
The ST Team