The week finished with a bang for growth stocks and weighed somewhat heavy on defensive areas of the market that were charging ahead going into this week.
I was pleased to see that after the close most of the "Diamonds in the Rough" were higher than while we were in the Diamond Mine trading room this morning. They finished slightly higher than the SPY as you can see on the spreadsheet.
The "Sector to Watch" this week was tough to pick. I had a tie between Real Estate (XLRE) and Healthcare (XLV). I opted to go with Healthcare due to the rising mortgage rates and the downward pressure that could cause on some of the stocks in that sector.
The "Industry Group to Watch" is Health Care Providers. A few names in this group that I would review? CNC, HUM and LH look interesting, but there are plenty more.
Today's "Darling" was Cheniere Energy (LNG) up +8.69% since we picked it Wednesday. Runner-up was also picked Wednesday, C.H. Robinson (CHRW) which was up +4.73%.
The "Dud" was yesterday's Rogers Commodities Index ETF (RJA). I was contemplating it, but I was reminded that GSG is probably a better vehicle. In the trading room this morning, it was brought up that Mosaic (MOS) is a way to play agriculture as they produce chemicals for fertilizers. The majority of these chemicals come from Russia/Ukraine area and with sanctions, we'll need to get it at home. This will likely move prices up.
The recording link for to today's Diamond Mine trading room is below and will be in every DP Diamonds report as is the registration link for next week's.
Have a great holiday weekend!
Erin
RECORDING LINK (2/25/2022):
Topic: DecisionPoint Diamond Mine (2/25/2022) LIVE Trading Room
Start Time: Feb 25, 2022 09:00 AM
Meeting Recording Link.
Access Passcode: Feb@25th
REGISTRATION FOR Friday 3/4 Diamond Mine:
When: Mar 4, 2022 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/4/2022) 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 (2/22) RECORDING LINK:
Topic: DecisionPoint Trading Room
Start Time: Feb 22, 2022 09:00 AM
Meeting Recording Link.
Access Passcode: Feb#22nd
For best results, copy and paste the access code to avoid typos.
A few items about the spreadsheet: I've put on the spreadsheet whether the RSI is positive (green) or negative (red). The PMO column tells you if it is rising (green) or falling (red). Finally I've added my own "Sparkle Factor" that gives you my assessment going forward, bullish (green), bearish (red) or neutral (gray). The Sparkle Factor is basically my thoughts on whether I expect it to rise or fall. A neutral means it could really go either way so it could be added to a watch list. If you're in a stock I consider "neutral" going forward, the ball is in your court.
Darling:
Cheniere Energy, Inc. (LNG)
EARNINGS: 2/24/2022 (BMO)
Cheniere Energy, Inc. engages in liquefied natural gas (LNG) related businesses. It owns and operates LNG terminals, and develops, constructs, and operates liquefaction projects near Corpus Christi, Texas, and at the Sabine Pass LNG terminal. The company was founded by Charif Souki in 1983 and is headquartered in Houston, TX.
Predefined Scans Triggered: Elder Bar Turned Green and New CCI Buy Signals.
Below are the commentary and chart from Wednesday (2/23):
"LNG is down -0.06% in after hours trading. I hesitated to include this one because it reports earnings tomorrow. If you decide you like this one, you'll at least have a heads up and can avoid any earnings death drops. I covered LNG on January 6th 2021 (position is still open and currently up a whopping +90.0%!
I like this area of the market, but it is hard to find stocks that don't have an overbought PMO SELL signal like XLE. This one has a brand new whipsaw PMO BUY signal and the PMO is not overbought. The RSI is positive and Stochastic have reversed. The group is still outperforming the market and LNG is outperforming the group and has been beating the SPY. I've set the stop at the 50-day EMA and November highs."
Here is today's chart:
We picked this one just in time for the big gap up move. Despite a large filled black candlestick yesterday, price did close higher on the day. At this point the issue is that the RSI is overbought. Other than that I like this one. When the gap up on earnings, it's usually a sign of more upside to come.
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!
Dud:
ELEMENTS Rogers International Commodity Index - Agriculture Total Return ETN (RJA)
EARNINGS: N/A
RJA tracks a consumption-based index of agricultural commodities chosen by the RICI committee. It gains exposure using front-month futures contracts.
For more information click HERE.
Predefined Scans Triggered: Filled Black Candles, Parabolic SAR Buy Signals and P&F Low Pole.
Below are the commentary and chart from yesterday (2/24):
"RJA is up +2.60% in after hours trading so I don't think the bearish black candlestick is going to be a problem. The RSI is positive although getting somewhat overbought. The PMO is accelerating higher on a crossover BUY signal. This ETF has been in a bull market for almost six months. The OBV shows us the new interest from investors. Stochastics are above 80, although they did top. As long as they stay above 80 we're good. The stop is set below the 50-day EMA."
Below is today's chart:
I really liked this one yesterday, but it turned ugly on the open with the bearish filled black candlestick from yesterday fulfilling with a gap down today. The chart is no longer attractive to me. Yes, it's only been one day, but it has been an enlightening day. Support is holding on the 20-day EMA, but when I look at Mosaic's (MOS) chart, I see a better investment. Also GSG might be a better alternative, it was only down around -1.71%. This one is low-priced so it is going to be volatile on top of everything else.
TODAY'S Sector Performance:
DecisionPoint Sector Scoreboard (Mechanical Trend Model Signals):
Click Here to view Carl's annotated Sector ChartList!
Short-term (Daily) RRG: Most bullish sectors in the short term are XLV and XLP. Both just entered Leading and have bullish northeast headings. Most bearish are XLK, XLY and XLF which all have bearish southwest headings.
Middle ground we have XLC, XLRE, XLI, XLU making gains with northeast headings. All four are in the Improving quadrant.
That leaves us with XLB and XLE. I like both of them still, but XLB is starting fade a bit now that it is traveling southward. XLE is heading back toward Leading even with a northwest heading.
Intermediate-Term (Weekly) RRG: XLE is the clear winner and outperformer in the intermediate term. No surprise there. XLF looks very bullish on the weekly RRG, but it is looking very bearish on the daily RRG, so take that one with a grain of salt.
XLI and XLC are in Improving and do have bullish northeast headings. I simply don't trust XLC yet. XLI looks good on both the weekly and daily RRGs.
Defensive sectors XLP and XLU are in Leading, but are beginning to lose ground in the intermediate term. XLV and XLB are also in Leading, but neither have a bullish northeast heading.
XLK, XLRE and XLY are the weakest on the RRG with all traveling in a bearish southwest direction or as in the case of XLY sitting deep in Lagging.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
CLICK HERE for an animated version of the RRG charts.
Sector to Watch: Health Care (XLV)
I like the participation on XLV the best. The Silver Cross Index (SCI) is turning up. %Stocks > 20/50-EMAs exploded today and have percentages well above the SCI giving the sector a bullish bias. There is a double-bottom that has developed. Price closed above the 20-day EMA and stopped short of the 50-day EMA. Given the positive indicators, I believe it will break above the 50-day EMA. I would look for the confirmation line of the double-bottom to at least be tested at about $135. The PMO is rising now as are Stochastics.
Industry Group to Watch: US Health Care Providers ($DJUSHP)
I picked Health Care Providers but I was also looking at Biotechs given I believe we have a bear market rally underway. The problem with Biotechs is they are volatile and hit and miss. You might want to keep an eye on that group as well. Love the big move that created yet another double-bottom pattern and saw price break above both the 20/50-EMAs. We just got a new Silver Cross BUY signal as the 20-day EMA crossed above the 50-day EMA today. The PMO is rising again and the RSI just hit positive territory. Stochastics are rising and we can see this one has been outperforming the SPY for some time. I'll look for these next week as well as Biotechs.
Go to our Sector ChartList on DecisionPoint.com to get an in depth view of all the sectors.
Have a great weekend! The next Diamonds Report is TUESDAY 3/1.
- Erin
erin@decisionpoint.com
Full Disclosure: I'm 8% exposed to the market, but may dip in if this truly turns out to be a bear market rally.
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!
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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)
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