Welcome to our weekly newsletter, where we offer insights into stock setups that we share with our Phoenix members.
This week the main indices initially opened weaker, driven by news of a potential debt crisis in China. However, as the week progressed the markets regained their footing, the overall strength returned. As trend traders, we utilise technical analysis, with a philosophy to be aware of the overall market dynamics, but to ignore the news.
During the current bull run, which commenced all the way back in 2009, there have been numerous examples of pullbacks, generally to areas of support, followed by the markets making new highs. This pattern has repeated itself so many times it is expected by seasoned trend traders such as those in our Phoenix community.
As we mentioned in last week’s newsletter, September is historically one of the weakest trading months of the calendar year. And over the past three weeks, the markets have shown general weakness compared to the impulse moves displayed in the preceding months. However, as mentioned, during these times we apply patience and await price to dictate our next move.
We offer our Phoenix members the critical teaching points to understand long-term price action, technical patterns, and market cycles. We teach our members how to take advantage of periods when the markets are trending, along with opportunities when the markets pull back.
Successful trading is a game of discipline and patience. We expect our patience will be rewarded, as it repeatedly has been in the past, with new opportunities along with compounding existing positions.
Looking deeper into the main indices:
- The S&P 500, this week initially displayed weakness but recovered to close above the 50sma. The all-time high remains at 4551.
- The Nasdaq 100, similarly showed initial weakness, to recover and close above the 50sma. The all-time high remains at 15710.
- The Dow Jones 30, which has been trailing the other indices, this week price was not able to find enough strength to close above the 20sma and 50sma. The all-time high remains at 35630.
- The FTSE 100, price initially weakened, retreating to the 200sma where it bounced and at the time of writing was trading marginally above the 20sma and 50sma.
The overall trend in the main indices remains bullish, and the probability remains weighted towards the continuation of the long-term bull trends established in 2009.
We continue to hold high-performing stocks in our portfolio, which we have been adding to during this round of breakouts. Good quality opportunities continue to present themselves, which allows us to diversify further. Whilst we continue to share setups and signals with our Phoenix members.
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 timeframe, for several months price has struggled to break above the pivot high from 2015 at 7124. In September price initially showed strength, but over the past three weeks price has weakened, in turn moving back below the 2015 monthly pivot level.
On the weekly timeframe, price initially weekend to trade below 200sma and 7000 round number, however in the latter part of the week the bulls took control and pushed price above these levels. The Sublime trend filter is currently grey, indicating indecision. At its current level, price remains in a period of consolidation, which commenced in April this year.
On the daily timeframe below, price traded this week below both the 20sma and 50sma. As a result, the Sublime Trend filter is currently interchanging between grey and red. However, our overall bias remains bullish, and we continue to look for stocks outperforming the Index.
Ashtead Group - AHT
A trending stock we have repeatedly discussed in this newsletter and with our Phoenix community. In July price took a breather from the bullish trend which commenced in mid-2020. However, strength returned in August and September, culminating in a new high this month at £62.84.
The Sublime trend filter is green on the weekly timeframe, and price is above the 50sma and 200sma.
On the daily timeframe below, the Sublime trend filter is also green, and price continues to trade above the 20sma, 50sma and the 200sma. Last week’s breakout was short-lived as this week price retreated to the 20sma, where it found support. If a trend can develop, price is headed towards the £100 major round number. We will continue to update our Phoenix community on this high-performing stock.
Dechra Pharmaceuticals - DPH
A stock with a good history of trends, price is currently in a strong uptrend. The momentum from July continued into August, however price in September has been erratic, due to earnings released on 6th September.
On the weekly timeframe, the Sublime trend filter is green, and price is trading above the 50sma and 200sma. This week price continued the recovery from the earnings event.
On the daily timeframe below, price is above the 20sma, 50sma and 200sma, and the Sublime trend filter is green. Since price broke above the major pivot level of £32 in August 2020, price retested this level several times and has since formed a bullish trend, using the 20sma as support. As mentioned above, price reacted erratically to the latest earnings results, with price retreating 18% from the high created on 24th August. Looking ahead, price needs to clear the current high with a continuation pattern to be considered further by our Phoenix members. The next area of resistance is the £60 round number.
JD Sports Fashion- JD
A stock with a strong history of trends, particularly between November 2013 and May 2017. Following the pandemic, price moved higher, however price action has not been particularly clean. More recently, the close above the £10 round number has resulted in an impulsive move higher. A gap up following earnings last week has resulted in a gain in September of 11.8%.
On the weekly timeframe, price initially broke out above the pivot high and prior year high at £8.90, before pulling back to use this level as support. Price is currently above the 50sma and 200sma, and the Sublime trend filter is green.
On the daily timeframe below, price is trading above the 20sma, 50sma and 200sma, and the Sublime trend filter is also green. Following a break and close above the £10 round number, price retreated to retest this level which coincided with the 20sma. Following the recent gap up, we now need to see a continuation pattern as price moves towards the next area of resistance, being the £20 round number. We will continue to update our Phoenix community members of opportunity in this stock.
The month of August closed with a strong end, displaying a bullish candle with a 2.9% gain. August was the seventh consecutive month of gains in a very bullish trend. In September the S&P has shown weakness which, as discussed in the introduction, is not unexpected at this time of the year and following the recent trends.
On the weekly timeframe, price continues to trade above the 50sma and 200sma, and the Sublime trend filter remains green.
On the daily timeframe below, price is above the 50sma and 200sma. This week price pulled back sharply, to trade below 50sma, before recovering. As a result the Sublime trend filter has displayed a mix of grey and red. We now wait to see if price will continue its recovery and challenge the all-time high at 4551. Our overall view remains unchanged, that the bulls remain in firm control of the S&P and, as a result, we continue to look for stocks that are outperforming the index.
American Tower Corporation – AMT
A stock with a mix of trends along with periods of consolidation. Price in July broke above a previous all-time high and displayed bullishness. This momentum continued throughout August creating a new all-time high, however since testing the $300 round number price has weakened during September.
On the weekly timeframe, the Sublime trend filter is green and price is trading above the 50sma and 200sma.
On the daily timeframe below, price has been using the zonal area between the 20sma and 50sma as support, moving higher without any clear direction. The Sublime trend filter is currently interchanging between grey and green indicating indecision. Looking ahead, a break and close above the $300 round number, along with a continuation pattern could offer Phoenix members an opportunity in a stock that has trended well in the past.
Brookfield Asset Management - BAM
This stock looks promising as there have been several strong trends in its past where price has sustained a trend for several years. In recent months price has also performed strongly, gaining 36% since March this year.
On the weekly timeframe, price is above both the 50sma and the 200sma and the Sublime trend filter is green. Since price cleared the previous year high at $46 price has displayed bullishness.
On the daily timeframe below, price is now trading within an area of consolidation which commenced on 10th August this year. This week price weakened, retesting the pivot high from 28th June, before the bulls took control and pushed price above the 20sma and 50sma. Price is also above the 200sma, whilst the Sublime trend filter is green. A breakout from consolidation and a continuation pattern could offer Phoenix members an opportunity in a stock that has a strong history of sustained trends.
Fortinet – FTNT
This stock continues to go from strength to strength. The current impulsive trend has continued throughout July and August, with increases of 14% and 16% respectively. In September price has to date been indecisive, which is not unexpected given the bullish trend since February this year.
On the weekly timeframe, price continues to trade above the 50sma and 200sma, and the Sublime trend filter remains green.
On the daily timeframe below, since price closed above the February pivot level, price has used the area between the 20sma and 50sma as support. This week price weakened to trade below the 50sma, however the bulls regained control in the latter part of the week. Price remains above the $300 round number. Phoenix members will be looking to add compounds to existing positions if this strong trend continues.
Nvidia - NVDA
NVDA is another one of our best-performing stocks in the Phoenix portfolio. Following our recent discussion in this newsletter, the stock has continued to power higher. During the second half of 2020, price was in a period of consolidation around $150, until price broke out in May this year. Following June’s powerful gain of 23%, price took a breather in July with an indecision candle. However, in August strength returned with a gain of 14.8% and an all-time high of $230. To date, September is displaying an indecision candle which is not unexpected given the recent gains.
On the weekly timeframe, the Sublime trend filter continues to be green, and price is trading above the 50sma and 200sma.
On the daily timeframe below, the Sublime trend filter is green and price is trading above the 20sma, 50sma and 200sma. This week price pulled back to the pivot high from 7th July and 5th August at $209, before the strength returned. Phoenix community members have multiple positions running in this stock, taking full advantage of the compounding opportunities that have presented themselves in recent months. The next area of resistance is the $300 round number.
Old Dominion Freight Line - ODFL
A stock with a mixed history of strong trends combined with long periods of consolidation. Since price closed above the previous year high of $213 in March this year, price has gained an impressive 40%.
On the weekly timeframe, price is above the 50sma and the 200sma and the Sublime trend filter is green.
On the daily timeframe below, price is above the 20sma, 50sma and 200sma and the Sublime trend filter is also green, confirming alignment with the weekly timeframe. Phoenix members have positions in this stock and will consider compounding opportunities should price form a clean break out and trend above the current all-time high at $304.
Tempur Sealy International - TPX
A stock with an interesting past. After this stock initially floated in 2003, price was in a long period of consolidation. A breakout and trend in 2011 was short lived and price subsequently went into a long period of consolidation. In February 2020 price initially broke out to create an all-time high, however, the pandemic forced price significantly lower. Since creating a new all-time high in November 2020, price has been in an impulsive, bullish trend gaining an incredible 96%.
On the weekly timeframe, price is trading above the 50sma and 200sma and the Sublime trend filter is green.
On the daily timeframe below, since price broke above $40 price has formed a linear trend, using the 20sma as support. Price has now approached the $50 round number, where a breakout and retest of this level followed by a continuation pattern could offer Phoenix members further compounding opportunities.
Zoetis - ZTS
A relatively new stock, floating in 2013, it has already displayed healthy trends. Price formed a linear trend between 2016 and 2019. Price then suffered a significant decline due to the pandemic, however price recovered and the long-term trend has continued. More recently, following a break and close above the previous year high at $178, price has been in a bullish trend.
On a weekly timeframe, the Sublime trend filter is green, and price is trading above the 50sma and 200sma.
On the daily timeframe below, Price has been in a period of consolidation since the 15th of July this year. This week price initially weekend to trade below the 50sma however price found strength to close back above the $200 round number, along with the 20sma and 50sma. The Sublime trend filter is currently grey. A breakout and continuation pattern above the current all-time high could offer Phoenix members further opportunities in this high performing stock.
Whilst it was initially a weak performance for the indices, strength returned towards the end of the week. A good number of stocks continue to have record growth, allowing our Phoenix members to compound and add more positions to their already profitable portfolios.
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Keep it simple. Keep it Sublime.
The ST Team