I've decided to share today's DP Diamonds Report in our free DecisionPoint Blog to give everyone a sample of how I cull and review my "Diamonds in the Rough". For those new to DP Diamonds Reports, on Thursday I analyze all of the reader requests that come in during the week and pick four that could be considered "Diamonds" or that provide a teachable moment. I also have included my Diamond pick to give us five stocks to review. Thank you to all the readers who took the time to submit your requests; I wish I could cover them all! A reminder, my Diamonds Report subscribers not only get 15 stock picks per week, I do a weekly recap on Fridays and the best benefit, a weekly Diamond Mine trading room for Diamonds subscribers only! To get a taste of this special trading room experience, join me for the FREE DP Trading Room on Mondays at Noon ET. Registration information is below.
Diamonds subscribers: I will be sending out this report to you separately so I can include the log in information for tomorrow's Diamond Mine trading room and I can make sure it is filed in the DP Diamonds Report archives.
Today's "Diamonds in the Rough" and Reader Requests: AMSWA, CO, DDD, FCAU, and VIPS.
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Recording from 10/9/2020 is at this link. Access Passcode: .6O2G.E!
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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!
American Software, Inc. (AMSWA)
EARNINGS: 11/19/2020 (AMC)
American Software, Inc. engages in the development and marketing of supply chain management and enterprise software solutions. It operates through the following segments: Supply Chain Management (SCM), Information Technology (IT) Consulting, and Other. The SCM segment offers supply chain optimization and retail planning solutions. The IT Consulting segment provides software enhancements, documentation, updates, customer education, consulting, systems integration services, maintenance, and support services. The Other segment involves the purchasing and materials management, customer order processing, financial, e-commerce, and traditional manufacturing solutions. The company was founded by James C. Edenfield in 1970 and is headquartered in Atlanta, GA.
I covered AMSWA in the July 21st Diamonds Report (-4.68% since then). This request was interesting. It has a bullish "cup and handle" pattern possibly. Other bullish signs are the RSI which is in positive territory above net neutral (50). The PMO is on a BUY signal and just entered positive territory. The OBV is rising. The SCTR isn't optimum. There could be some difficulty given that price has been unable to successfully overcome resistance at the 200-EMA. Yet, it is managing to hold support above the 20-EMA. I set my stop level about midway down in the previous trading channel.
The RSI has nearly reached positive territory. The weekly PMO is trying to bottom in oversold territory above the zero line. I have conservatively listed the 2018 top as the upside target. If it can break out from there, I'd look for a move to $19.50 or even $21.00.
Global Cord Blood Corporation (CO)
EARNINGS: 11/24/2020 (AMC)
Global Cord Blood operates as a holding company, which engages in the provision of cord blood banking services. It provides cord blood processing and storage service. The company also offers cord blood collection, laboratory testing, hematopoietic stem cell processing and stem cell storage services. It preserves cord blood units donated by the public and provides matching services on such donated units and deliver matching units to patients in need of transplants. Global Cord Blood was founded on January 17, 2008 and is headquartered in Hong Kong.
Typically I don't look at stocks that are priced this low. It was requested and the reader said that others might find this small-cap selection interesting. I would recommend watching your position size to avoid being overexposed to the volatility. The RSI has reached positive territory again. The 20/50-EMAs are holding up nicely as support. The PMO whipsawed back into a crossover BUY signal. The OBV is confirming the rising trend from the September low. Remember that when the 50-EMA is below the 200-EMA, the stock is in a bearish configuration so adjust your expectations accordingly. Price needs to breakout above the 200-EMA to adjust this to a more bullish bias.
I have to say the weekly chart on this one is enticing. The RSI just reached positive territory and the PMO is rising nicely out of very oversold territory. I'll feel better when it is above the zero line. There is a long-term falling wedge and we are breaking from it. It is more of a "drift" sideways, but a break nonetheless.
Don't forget, on Thursdays I look at reader-requested symbols, so shoot me an email at erin@decisionpoint.com. I read every email I receive and try to answer them all!
3D Systems Corp. (DDD)
EARNINGS: 11/5/2020 (AMC)
3D Systems Corp. is a holding company, which engages in the provision of comprehensive three dimensional printing solutions. It includes three dimensional printers, materials, software, on demand manufacturing services, and digital design tools. The company was founded by Charles W. Hull in 1986 and is headquartered in Rock Hill, SC.
Up +0.85% in after hours trading, DDD exploded today (nice pick, Tom!). It has reached overhead resistance and likely will pullback tomorrow which is why the stop is so wide. I would expect that you can get a better entry than today's close, so the stop likely wouldn't be that deep. It is VERY overbought as well when you look at the RSI. The OBV shows us that major accumulation is taking place. Additionally we have a SCTR that just entered the "hot zone" above 75 (this means that DDD is in the top quartile of small-cap stocks).
The falling wedge on the weekly chart goes back to 2018. Currently price is attempting to breakout of the pattern and rally. Conservatively I have marked the 2020 high as an upside target. That is still a sizable profit.
Fiat Chrysler Automobiles NV (FCAU)
EARNINGS: 10/28/2020
Fiat Chrysler Automobiles NV engages in the design, engineering, manufacturing, distribution and sale of automobiles and light commercial vehicles, engines, transmission systems, automotive-related components, metallurgical products and production systems. It operates through the following geographical segments: North American Free Trade Agreement, Latin America, Asia-Pacific, Europe, the Middle East & Africa, Maserati, and Components. The NAFTA segment engages in the designing, engineering, development, manufacturing, distributing and selling of automobiles under the Chrysler, Jeep, Dodge, Ram and Fiat brand names, vehicles with the SRT performance designation and from sales of the related parts and accessories in the United States, Canada and Mexico. The LATAM segment sells passenger cars and light commercial vehicles and related spare parts under the brand names, Fiat and Fiat in South and Central America and it also provides financial services in Brazil and Argentina. The APAC segment offers cars, engines and transmissions and related spare parts under the Chrysler group and Fiat brands in China, Japan, Australia and India. The EMEA segment designs, develops and sells passenger cars and light commercial vehicles under the Fiat, Alfa Romeo, Lancia, Chrysler, Abarth and Fiat Professional and the sale of the related spare parts in Europe, Middle East and Africa. The Maserati segment manufactures, designs, engineers distribution and sale of luxury vehicles under the Maserati brand. The Components segments includes production and sale of lighting components, body control units, suspensions, shock absorbers, electronic systems, and exhaust systems, and others. The company was founded on April 1, 2014 and is headquartered in London, the United Kingdom.
Up +0.61% in after hours trading, FCAU is my "Diamond in the Rough" pick today. The auto market is heating up as many automakers begin to foray into research, development and production of EVs. Fiat Chrysler has enjoyed a steadily rising trend since the bear market low. The RSI is positive, the OBV is confirming the price rise and the PMO is going in for a crossover BUY signal. The SCTR is also in the hot zone.
Very bullish weekly chart with a positive RSI and strongly rising weekly PMO that is not overbought. I've conservatively marked the upside target to $15.50.
Vipshop Holdings Ltd. (VIPS)
EARNINGS: 11/11/2020 (BMO)
VipShop Holdings Ltd. engages in the provision of online products sales and distributions services. It offers womenswear; menswear; footwear; accessories; handbags; apparel for children; sportswear and sporting goods; cosmetic goods; home and lifestyle products; luxury goods; and gifts and miscellaneous. It cooperates with domestic and overseas brand agents and manufacturers. The company was founded by Ya Shen and Xiao Bo Hong on August 22, 2008 and is headquartered in Guangzhou, China.
Down -0.16% in after hours trading, I have covered VIPS twice before in the March 11th (up +16.55% since) and May 13th (up +8.61% since) Diamonds Reports. The pullback has formed a flag which is a bullish pattern. The PMO has just entered positive territory and is on a BUY signal. I would set the stop around the 20/50-EMAs.
The weekly RSI has just entered positive territory. The weekly PMO is indecisive right now. However, the OBV has a lovely positive divergence. A move back to the 2020 top is a nice 30%+ gain.
Full Disclosure: I have a limit order to reacquire SPWR on this recent pullback. I'm about 40% invested and 60% is in 'cash', meaning in money markets and readily available to trade with.
Current Market Outlook:
Market Environment: It is important to consider the odds for success by assessing the market tides. The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA)
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA)
- The Bullish Percent Index (BPI) shows the percentage of SPX stocks on Point & Figure BUY signals.
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 is the current chart:
Diamond Index 10/13:
- Diamond Scan Results: 1
- Diamond Dog Scan Results: 32
- Diamond Bull/Bear Ratio: 0.03
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
erin@decisionpoint.com
Watch the latest episode of DecisionPoint with Carl & Erin Swenlin on Mondays 7:00p EST or on the DecisionPoint playlist on the StockCharts TV YouTube channel here!
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."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com!