The market rebounded strongly today and with it came some interesting chart set-ups. Yesterday's "Diamonds in the Rough" enjoyed the rally today with three out of four moving higher, two of them with 1.5% + gains.
Today's "Diamonds in the Rough" floated to the surface quickly from my scans. One of the charts was particularly bullish given the multiple positive divergences. It is also in the Consumer Staples area which is beginning to perk up. This could be a good area to be exposed to given the intermediate-term weakness in the market right now.
A note about two of the "Short List" stocks.
I've been watching Palladium (PALL) closely as it has been in a complete free fall. It is beat down and is now rebounding. I'm not convinced that this is the bottom on PALL. A look at its weekly chart tells me that it could still test its bear market lows which are 20% lower than price is now. It's on my watch list, so I'll keep you updated as it moves forward.
The other stock is METC. A reader pointed out that Coal's pullback could be over giving us an excellent entry. However, in my work, it hasn't ripened enough for my taste. Keep it and coal on your watch lists as well.
I could use your support! Tomorrow I am lined up to do a presentation. The details are below. I don't have many scheduled to attend or receive the recording so I wanted to give you a chance to get on the list to either view it live or receive the recording. Details are below:
How to Identify Market Pivot Points with Climax Analysis
Thursday at 4p ET I am scheduled to present at Synergy Trader's "VIX and News Event Trading" Live Training Session. I'll be discussing how to use the VIX as part of my "climax" analysis to determine pivot points in the market. I'd really appreciate you signing up. You don't have to attend the live event. Recordings will be sent to those who register. If you're interested, here's the link.
Today's "Diamonds in the Rough" are: ABG, CDMO and SMPL.
"Short List" (no order): AGNC, TTD, CF, PALL and METC.
RECORDING LINK Friday (9/17):
Topic: DecisionPoint Diamond Mine (9/17/2021) LIVE Trading Room
Start Time : Sep 17, 2021 09:00 AM
Meeting Recording Link.
Access Passcode: Sept/17th
REGISTRATION FOR FRIDAY 9/24 Diamond Mine:
When: Sep 24, 2021 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (9/24/2021) LIVE Trading Room
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Save the registration confirmation email with login instructions in case Zoom doesn't notify you in time.
Free DP Trading Room (9/13) RECORDING LINK:
Topic: DecisionPoint Trading Room
Start Time : Sep 13, 2021 09:01 AM
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Access Passcode: Sept/13th
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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!
Asbury Automotive Group Inc. (ABG)
EARNINGS: 10/26/2021 (BMO)
Asbury Automotive Group, Inc. operates as a holding company, which engages in the automotive dealership. Its services include oil change, car brakes, changing tires, check engine light, battery, and wheel alignment. The company was founded in 1995 and is headquartered in Duluth, GA.
Predefined Scans Triggered: Entered Ichimoku Cloud and P&F Double-Top Breakout.
ABG is unchanged in after hours trading. Today we had both a PMO Crossover BUY signal and a ST Trend Model BUY signal (5-EMA crossed above the 20-EMA). Price closed above the 50-EMA for the first time since breaking down in late August. The RSI is now positive and the OBV is confirming the rising trend. Relative strength is strong. The stop is rather deep at about 9%. You can tighten that up to support at the late March and mid-July troughs.
Not a fan of the weekly chart, but there are bullish characteristics. Starting with the bad news, there is a large double-top formation. Price did bounce off the 43-week EMA rather than test the confirmation line at the June low. The PMO looks like it is decelerating, but it is still falling. Upside potential is about 18% if it can continue the rally.
Avid Bioservices, Inc. (CDMO)
EARNINGS: 12/1/2021 (AMC)
Avid Bioservices, Inc. engages in the commercial manufacturing. The firm focuses on the biopharmaceutical products derived from mammalian cell culture for culture for biotechnology and pharmaceutical companies. It specializes in clinical and commercial product manufacturing, purification, bulk packaging, stability testing and regulatory submissions and support. The company was founded on June 3, 1981 and is headquartered in Tustin, CA.
Predefined Scans Triggered: Elder Bar Turned Green
CDMO is up +0.09% in after hours trading. This one is from my Momentum Sleepers scan so the chart isn't completely ripe, but it is moving in the right direction. It did close below the 200-EMA but it is making a comeback. The RSI is rising and the PMO has turned up in oversold territory. What really sold me on this one was the strong positive divergence with the OBV and the rising Stochastics out of oversold territory. Relative strength is good. The stop is set below the 200-EMA. There is risk that price will need to test the prior September low before breaking out, but the indicators are improving.
The weekly PMO is a problem, but we do see the weekly RSI turning back up. Price rebounded off the 43-week EMA and support at the April/May lows. Upside potential is over 30% if the rally gets going.
The Simply Good Foods Co. (SMPL)
EARNINGS: 10/25/2021 (BMO)
The Simply Good Foods Co. engages in the development, marketing, and sale of nutritional food and snacking products. Its products include nutrition bars, ready-to-drink shakes, snacks, confectionery, and frozen meals under the Atkins, SimplyProtein, Atkins Harvest Trail, and Atkins Endulge brands. The company was founded on March 30, 2017 and is headquartered in Denver, CO.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Bullish MACD Crossovers, P&F High Pole and Parabolic SAR Buy Signals.
SMPL is unchanged in after hours trading. This is my favorite chart today based on the multiple positive divergences visible. We have rising bottoms on the PMO, the OBV and Stochastics while price bottoms were declining. The PMO just gave us a crossover BUY signal and the RSI just moved into positive territory. The 5-EMA is nearing a positive crossover the 20-EMA which would trigger a ST Trend Model BUY signal. Relative performance has been good, but it is getting better as it angles higher against the group and the SPX. The stop is reasonable at about 7%.
The weekly chart shows price getting back above the March/April tops and the weekly RSI turned up above net neutral (50). The weekly PMO does need a lot of work.
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 70% invested and 30% is in 'cash', meaning in money markets and readily available to trade with. Stops are set on nearly every position. They're still rather tight, but today's rally made them less so.
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