Most of today's reader requests are taking advantage of new strength in the defensive areas of the market, particularly Real Estate and Consumer Staples. I also had a reader throw a Gold Miner in the mix. My pick is from the Utilities sector which is also gaining strength again.
I recommend that you watch today's edition of Chartwise Women. Mary Ellen and I discussed the pockets of strength coming from these defensive sectors. Relative strength studies were discussed so you can get ahead of the market. The big reason to watch is that we both jetted through lots of stock picks in these areas that are showing new relative strength. Here is a link to the show.
A few notes about this week's "Diamonds in the Rough", Tuesday was a good news, bad news day. ARQT hit its 8% stop. However, GPX popped +26.59% today! Nice to find those, but admittedly I didn't take the jump for my portfolio. Hopefully someone out there did!
Don't forget to register for this Friday's Diamond Mine trading room! Here is the link. It is also below the recording links.
Today's "Diamonds in the Rough" are: AIRC, DRE, FNV, KR and NEE.
Stocks to Review (no order): NHTC, PG, CL, PNW, XEL and PDM.
A reminder, the "Stocks to Review" are stocks that were on my short list for the day.
Diamond Mine Information:
RECORDING LINK Wednesday (6/25):
Topic: DecisionPoint Diamond Mine (6/25) LIVE Trading Room
Start Time : Jun 25, 2021 09:00 AM
Meeting Recording for 6/25 is HERE.
Access Passcode: June-25th
RECORDING LINK "Bonus" Diamond Mine Wednesday (7/14):
Topic: Make-up DecisionPoint Diamond Mine (7/14/2021) LIVE Trading Room
Start Time : Jul 14, 2021 08:59 AM
Meeting Recording LINK for 7/14 is HERE.
Access Passcode: July-14th
REGISTRATION FOR FRIDAY (7/16) Diamond Mine:
When: Jul 16, 2021 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (7/16/2021) LIVE Trading Room
Register in advance for this webinar HERE.
Save the registration confirmation email with login instructions in case Zoom doesn't notify you in time.
Free DP Trading Room RECORDING LINK:
Topic: DecisionPoint Trading Room
Start Time : Jul 12, 2021 09:00 AM
Meeting Recording for DP Trading Room is HERE.
Access Passcode: W72^WzSb
For best results, copy and paste the access code to avoid typos.
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!
Apartment Income REIT Corp. (AIRC)
EARNINGS: 7/29/2021 (AMC)
Apartment Income REIT Corp. operates as a real estate investment trust, which owns and operates apartment communities. It provides a way to invest in multi-family real estate through simplified business model and diversified portfolio of stabilized apartment communities. The company is headquartered in Denver, CO.
AIRC is unchanged in after hours trading. This reader request broke out yesterday and followed through by closing at another all-time high. There is a clear and steady rising trend. The RSI is positive and the PMO only recently gave us a crossover BUY signal. The OBV does have rising bottoms, but given the breakout, we should've seen the OBV breakout as well, so currently there is a bit of a negative divergence there. The SCTR is in the "hot zone" above 75. Relative performance is strong near term.
This a steep rising trend channel on the weekly chart. We don't have enough data to calculate the PMO, but the RSI is on the overbought side. Volume on the weekly chart is very strong. You'll note that even though I have less data points I don't stretch out the chart anymore. It's best for us to view a weekly chart with the same settings to give us perspective and the ability to compare them to other weekly charts we look at.
Duke Realty Corp. (DRE)
EARNINGS: 7/28/2021 (AMC)
Duke Realty Corp. operates as a real estate development company, which specializes in the ownership, management and development of industrial and medical office properties. It offers property and asset management, leasing, construction and other tenant related services. Its diversified portfolio of rental properties encompass various business houses such as government services, manufacturing, retailing, wholesale trade, distribution, healthcare and professional services. The firm operates its business through the following segments: Industrial Properties, Medical Office Properties, and Service Operations. The Industrial Properties segment offers warehousing facilities and light industrial buildings. The Service Operations segment provides real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures. The company was founded by John Stoddard Rosebrough, Phillip R. Duke, and John W. Wynne in 1972 and is headquartered in Indianapolis, IN.
DRE is unchanged in after hours trading. This reader request caught my eye given the short-term bull flag. Price is beginning to breakout of this continuation pattern. Upside potential based on the minimum upside target for the flag is about $53 which would be a small gain of just under 6%. However, the chart suggests price will move higher than that. The RSI is positive and the PMO is on a new crossover BUY signal. The OBV is confirming the move. The SCTR is in the "hot zone" and relative performance is excellent. If you want a top performer within this industry group, DRE is the stock.
I love it when I pull up a weekly chart and the PMO is rising and not overbought. The weekly RSI is on the overbought side, but DRE has been mostly overbought since April.
Franco-Nevada Corp. (FNV)
EARNINGS: 8/11/2021 (AMC)
Franco-Nevada Corp. engages in the management of gold-focused royalties and streams portfolio. It provides investors with gold price and exploration optionality while limiting exposure to many of the risks of operating companies. The company was founded on October 17, 2007 and is headquartered in Toronto, Canada.
FNV is up +0.40% in after hours trading. This reader request was covered in the June 25th 2020 Diamonds Report. It was up almost 22% at the August top, but then steadily lost ground until the stop was eventually hit in January of this year. I challenged readers to find their own Gold Miner favorites and I was presented with this excellent chart. Price has a rounded bottom that could be considered a double-bottom, but that's a reversal pattern and I'm not satisfied that this fits that definition. In any case, price broke above July resistance yesterday and followed through today with a +2.28% move. This pushed the PMO above its signal line for a BUY signal. The RSI is positive and not overbought. The SCTR just entered the "hot zone" today. While the group is performing inline with the SPX, FNV is outperforming the group and the SPX. I am looking for a breakout.
The weekly chart is very bullish. Price is in a bull flag and is beginning to execute the pattern with a breakout. The weekly RSI is positive and rising. The PMO was turning over, but it has bottomed above the signal line which is especially bullish. The minimum upside target for the flag would be about $205 or a gain of over 33%.
Kroger Co. (KR)
EARNINGS: 9/10/2021 (BMO)
The Kroger Co. engages in the operation of supermarkets and multi-department stores. Its brands include Big K, Check This Out..., Heritage Farm, Simple Truth, and Simple Truth Organic. The company was founded by Barney Kroger in 1883 and is headquartered in Cincinnati, OH.
KR is down -0.31% in after hours trading. This reader request came in prior to today's rally, so I hope this reader enjoyed some gains. I've covered it twice before on March 12th 2020 and April 23rd 2020. I didn't set a stop level on KR on 3/12/20 so I can't take credit for the 33% gain since then. A stop of about 9.2% would not have been triggered, but a stop less than that would've triggered. The April position is still open and standing at +18.12% gain.
The chart looks good with price traveling in a wide rising trend channel. Price is headed back up to test the top of it again. The RSI is positive and the OBV bottoms are confirming the rally off the July low. The SCTR is rising and relative performance is improving. The PMO has bottomed and there is a new ST Trend Model BUY signal given the positive 5/20-EMA crossover today. The stop can be set at a comfortable 6.5%.
The weekly chart is positive. At first the weekly PMO seemed bearish, but it is beginning to flatten out and possibly bottom above the signal line. The OBV is confirming the rally from the 2020 low and the weekly RSI is positive and not overbought. It's near all-time highs, so I would double the stop level above and set an upside target for a 14% gain around $44.30.
NextEra Energy Inc. (NEE)
EARNINGS: 7/23/2021 (BMO)
NextEra Energy, Inc. is an electric power and energy infrastructure company. It operates through the following segments: FPL & NEER. The FPL segment engages primarily in the generation, transmission, distribution and sale of electric energy in Florida. The NEER segment produces electricity from clean and renewable sources, including wind and solar. It provides full energy and capacity requirements services; engages in power and gas marketing and trading activities; participates in natural gas production and pipeline infrastructure development; and owns a retail electricity provider. The company was founded in 1984 and is headquartered in Juno Beach, FL.
NEE is down -0.35% in after hours trading. This is my selection for today as I thought we should have a Utility in the mix. I mentioned AEE as a "Stock to Review" on Tuesday. I almost picked that, but decided to go with the breakout on NEE. I've covered NEE twice before on September 3rd 2020 and on April 1st 2021. Since I picked it in September of 2020, it underwent a 4:1 split, so if you look at the chart from then, don't get confused. The stop was never hit so the position is up +9.5%. The stop was also never hit on the April position, it is up a small +1.39% since.
I like that we got a breakout from the intermediate-term rising trend channel. The RSI is positive and the PMO is on a BUY signal. The OBV is confirming the rally. It has begun to accelerate its outperformance this week. The stop is set below support.
The weekly chart is enticing given the newly positive RSI and weekly PMO bottom. There is a flagpole with a pennant. The upside target of that very long flag would be well past the all-time high with over 50% upside potential.
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!
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:
Full Disclosure: I'm about 60% invested and 40% is in 'cash', meaning in money markets and readily available to trade with. I bought yesterday's "diamond in the rough", AQI this morning.
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