I ran quite a few scans today, ultimately selecting four from my "Diamond Scan" and one from "Carl's Scan". The Diamond Scan picks stocks that are enjoying an uptrend already, while Carl's Scan finds bottom fishing opportunities. I'll discuss this in more detail on the Denny's (DENN) charts. All five diamonds in the rough are from different sectors, so pick your favorite. Real Estate seems to be returning to favor with a nice rally and some of the Industrials have been interesting. I have two diamonds from these sectors today.
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Welcome to DecisionPoint Daily Diamonds, wherein I highlight five "diamonds in the rough." These are selected from the results of my DecisionPoint scans, which search for stocks that could benefit from the trend and condition of the market. Remember, these are not recommendations to buy or sell, but are the most interesting of the stocks that surfaced in my scans. My objective is to save you the work of the initial, tedious culling process, but you need to apply your own analysis to see if these stocks pique your interest as well. There are no guaranteed winners here!
Current Market Outlook:
Market Trend: Currently, we have Trend Model BUY signals in all three timeframes on the DP Scoreboard Indexes.
Market Condition: The market is overbought, with Price Momentum Oscillator (PMO) BUY signals on the DP Scoreboards. Remember, overbought conditions can persist in a bull market.
Market Environment: It is important to consider the odds for success. The Silver Cross Index measures the percentage of stocks on IT Trend Model BUY signals (20-EMA > 50-EMA), while the Golden Cross Index measures the percentage of stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). Here are the current percentages on the Silver and Golden Cross Indexes:
- Diamond Scan Results: 10
- Diamond Dog Scan Results: 18
- Diamond Bull/Bear Ratio: 0.56
Denny's Corp (DENN) - Earnings: 2/10 - 2/14/2020
This came from Carl's Scan, which picks up stocks that have really been beaten down. The consequence of this is that the weekly charts usually look pretty ugly. That being said, I very much like the daily chart. We have a rounded bottom or "cup" forming just as the PMO is making a nice move to the upside in very oversold territory. I would set my stop around $18.90 based on the support at $19.00. That should hold up; if it doesn't, it will likely continue lower. I'm eyeing this one for my portfolio as a shorter-term investment (one that I have to pay close attention to). The OBV is perking up and, while the SCTR ranking isn't ideal, it is holding its own and not moving lower.
It isn't great seeing a weekly PMO looking like this, which is why I would keep an eye on it and stop it below that very important support line.
Frontline Ltd (FRO) - Earnings: N/A
This stock has been in a steep rally recently; today it exploded with a 4.41% gain. We got a gap up with that price move, which could be a sign of a breakaway or continuation. I wouldn't chase here, but if it holds that gap open on a pullback that would be bullish. The PMO is nearing a BUY signal just above the zero line, which is what I like to see. The SCTR is also back in the "hot zone."
We have a very large cup structure on the weekly chart with rising PMO bottoms as it moved away from the 2018 low. The PMO is on the overbought side, but it bottomed above the signal line and still has some room to rise based on the 2014 high.
Healthcare Trust of America Inc (HTA) - Earnings: 2/12 - 2/17/2020
I like the nice bounce off of solid support for HTA. The OBV is confirming this current rally; today was the third day it closed above the 20-EMA. You can see how price lows have bounced off the 20-EMA since the September low. I also note that the 5-EMA has just crossed above the 20-EMA to give us a Short-Term Trend Model BUY signal.
I note that the $30 area is important on the weekly chart. We need to see price close above that level given the strong overhead resistance formed by the 2016 and 2017 highs. The PMO had peaked, but it is moving back up again and is not overbought.
LeMaitre Vascular Inc (LMAT) - Earnings: 10/23/2019
This stock has been holding onto the support at the 20-EMA and broke out further today. The OBV mimicked the price breakout with a breakout of its own. The SCTR is back in the hot zone. I note that on this one-year daily chart, PMO crossovers have been clean and fairly accurate, which is encouraging since the PMO is about to give us a new crossover BUY signal.
The weekly PMO is turning up following a brief decline. The rising trend looks strong. I would set a target around $40, but re-evaluate when it hits $38 to make sure the charts still look healthy.
TTM Technologies Inc (TTMI) - Earnings: 2/4 - 2/10/2020
I will immediately point out the flaw on this chart, which is a negative divergence with the OBV. However, the PMO has been flat and is not overbought. A flat PMO is generally the result of a steady rising trend; I believe it will continue. The SCTR looks fantastic as it shoots into the hot zone.
I'm forgiving the OBV negative divergence because I very much like the double-bottom formation I'm seeing on the weekly chart. The upside target, should the pattern execute with a breakout above the confirmation line at the 2019 high, would be around $19, but my target would be the 2018 high.
Full Disclosure: I do not own any of the stocks above and I'm not planning on adding any at this time. While I can't guarantee that I won't add any, I can say that 99% of my investments come from my scans, so I am showing you my actual candidates. I'm currently about 80% in cash.
I will be presenting at the "Market Vision 2020" online conference on January 4th! It is sponsored by EarningsBeats.com and promises to be "THE" event to start the new year. We will have many of the commentators that you love presenting their "market view" for 2020, with John Murphy as the keynote speaker! For information on the event, sign up for the free emails that will give you all the details as we get closer!
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Technical Analysis is a windsock, not a crystal ball.
NOTE: The stocks reported herein are from mechanical trading model scans that are based upon moving average relationships, momentum and volume. DecisionPoint analysis is then applied to get five selections from the scans. The selections given should prompt readers to do a chart review using their own analysis process. This letter is not a call for a specific action to buy, sell or short any of the stocks provided. There are NO sure things or guaranteed returns on the daily selection of "diamonds in the rough."
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