I ran a few different scans as I wasn't pleased with results from just one scan. Interestingly, I ended up finding 'diamonds in the rough' from five different sectors. I noticed a few more results from the Materials sector and basically zero results from the depressed Energy sector. I did run a bearish scan and found a plethora of banks listed. I will be watching that industry group as it is being beat down and there are quite a few interesting areas of support where we could see a bounce once negative momentum lets up. Additionally, check out the positive divergence with the OBV.
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!
Arbor Realty Trust Inc (ABR) - Earnings: 2/13 - 2/17/2020
ABR is rallying after a nice positive divergence with the OBV. The PMO just triggered a BUY signal. There is a bullish double-bottom pattern that might be executing soon. Interestingly, the minimum upside target for the double-bottom would be right at overhead resistance around $15.50. The SCTR is just now hitting above 75.
Not the best weekly chart as the PMO is falling and nearing a SELL signal. The PMO is decelerating a bit and the dominate price pattern is a bull flag.
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America Movil (AMX) - Earnings: N/A
AMX broke out and held on to the rising trend. The PMO just triggered a BUY signal. The OBV is confirming the price lows from December and January. I would have liked to have seen the OBV hit a new high on the breakout, but the SCTR move is impressive so I will forgive that.
This weekly chart looks very promising. We are seeing a breakout from important overhead resistance. Note how that resistance line was at the 2013/14 lows, the 2017 low and the tops from 2019. The weekly PMO is rising nicely and isn't overbought.
Altice USA Inc (ATUS) - Earnings: 2/19 - 2/24/2020
I really like the PMO on ATUS. After breaking out at the beginning of the month, price has been forming a pennant or flag. The expectation is higher prices. Price is now beginning to close the gap from the giant November gap down. Gaps generally are closed and seeing this one about halfway there is encouraging. The PMO is accelerating higher.
We are seeing a momentum shift on the weekly chart. My upside price target is $32.
Herman Miller Inc (MLHR) - Earnings: 3/18 - 3/23/2020
Price bounced off a very important area of support. It is pulling back somewhat so putting a stop in below $40 would be a good idea. This is from Carl's Scan so this is a beat down stock, but it is at a "decision point". The PMO is nearing a BUY signal. Stop levels are easy to see, so this could be an interesting play. Upside targets could be $43 or best case $46 or $49.
Note the 'touches' on the $40 support level. This is definitely where I would set my stop on this one. If it loses that support level, I don't see it turning around anytime soon.
Verso Corp (VRS) - Earnings: 11/12/2019
The PMO did just hit negative territory, but it is decelerating just as price is bouncing off important support. I'd say the risk here is that the gap that formed in November hasn't been closed. Price hasn't been able to get above the 20-EMA yet, but I feel the OBV's rising bottoms supports the current rally. What really enticed me was the possible reverse head and shoulders that is forming.
The weekly chart shows not only that head and shoulders, but I think you could make a case for a bull flag right now. The weekly PMO is turning back up. I may be looking to add this one to my portfolio soon. If I do, I will let you know.
Current Market Outlook:
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). Don't forget that as a "Diamonds" member, you have access to our GCI/SCI curated ChartList on DecisionPoint.com. You'll find it under "Members Only" links on the left side on the Blogs and Links Page. Here are the current percentages on the Silver and Golden Cross Indexes:
- Diamond Scan Results: 12
- Diamond Dog Scan Results: 13
- Diamond Bull/Bear Ratio: 0.92
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Full Disclosure: I do not own any of the stocks above. I'm currently 35% in cash.
Erin Swenlin will be presenting at the The MoneyShow Las Vegas on May 11-13, 2020! You'll have an opportunity to meet Erin and discuss the latest DecisionPoint news and Diamond Scans. The conference is free to attend or view online!
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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