I suspect today's broad market lift-off is the beginning of a short-term bear market rally--emphasis on "short term". However, we have to be prepared for this to be a blow off event. My scans were filled with some amazing reversals, but I'm sticking to my guns that if we are on the buy-side, we should be looking at stocks that are currently not in bear markets. I intentionally only picked stocks with a 50-day EMA above the 200-day EMA. Downside risk should be tempered given these stocks, while reversing, have stronger set-ups.
I found that Industrials were a 'theme' today in my scan results--transports in particular. Other themes were Semiconductors and Banks. I don't trust Technology or Financials, but I do think they will see a nice rally over the next few days.
I was asked how I 'knew' to decrease my exposure to 15% by a subscriber. My analysis of our indicators, price action and sentiment were all factors. DP Alert subscribers know what I'm talking about. I am considering expanding my exposure, maybe to 25% with a very short-term time horizon to take advantage of short-term strength. Overall, I will tell you to exercise EXTREME caution on the buy side. I plan on using tight stops if I dip my toes in the water.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": MATX, TGH and ZIM.
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Welcome to DecisionPoint Daily Diamonds, wherein I highlight ten "Diamonds in the Rough" per week. 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!
"Predefined Scans Triggered" are taken from StockCharts.com using the "Symbol Summary" option instead of a "SharpChart" on the workbench.
Matson, Inc. (MATX)
EARNINGS: 7/28/2022 (AMC) - Reported Yesterday
Matson, Inc. is a holding company, which engages in the provision of logistics and transportation services. It operates through the Ocean Transportation and Logistics segments. The Ocean Transportation segment offers ocean freight transportation, container stevedoring, refrigerated cargo services, inland transportation, and other terminal services. The Logistics segment includes domestic and international rail intermodal services, regional highway brokerage, specialized hauling, expedited freight operations, supply chain management, storage, and distribution services. The company was founded in 1882 by William Matson and is headquartered in Honolulu, HI.
Predefined Scans Triggered: New CCI Buy Signals and P&F Double Top Breakout.
MATX is down -2.09% in after hours trading, essentially taking back today's gains if that decline sticks tomorrow. Given they reported earnings yesterday and they were up +2.85% today, I am comfortable here. Just be sure to watch that 5-minute candlestick chart closely.
The RSI just turned positive. There is a large bullish double-bottom pattern that would be confirmed with a breakout above the center of the "W". The minimum upside target would take price to the February top. The PMO had a crossover BUY signal today. Stochastics are rising and are now in positive territory above net neutral (50). The group over time has been outperforming. MATX was doing well until the early April meltdown or more aptly, deep dive. I like the setup, but we do need to be aware that overhead resistance at the late January high is approaching. I've set the stop just below the 200-day EMA. I don't think you need to hang on that long if this one begins to fail. It's the deepest stop I'd be comfortable setting.
Price bottomed on very strong support. The weekly RSI is now above net neutral (50) and the PMO is beginning to decelerate. Upside potential looks excellent at 33%.
Textainer Group Holdings Ltd. (TGH)
EARNINGS: 5/5/2022 (BMO) ** REPORTS TOMORROW! **
Textainer Group Holdings Ltd. engages in the purchase, management, leasing, and resale of a fleet of marine cargo containers. It operates through the following segments: Container Ownership, Container Management, and Container Resale. The Container Ownership segment composed primarily of standard dry freight containers and also includes special-purpose containers. The Container Management segment manages a fleet of containers for and on behalf of owners. The Container Resale segment consists of purchases and leases or resells of containers from shipping line customers, container traders, and other sellers. The company was founded in 1979 and is headquartered in Hamilton, Bermuda.
Predefined Scans Triggered: Ichimoku Cloud Turned Green and Parabolic SAR Buy Signals.
TGH is unchanged in after hours trading so we don't have any hints as to how earnings will go tomorrow. They report before the market opens, so you'll have the advantage of deciding whether this is worth it based on the reaction to earnings. Like MATX, we have a double-bottom pattern that will be confirmed when price gets above $37.50. The RSI just turned positive and the PMO had a new crossover BUY signal today. Stochastics are rising and have moved above 50. Relative strength for the group hasn't been that impressive, but at least TGH has been outperforming both the group and market. The stop is set below support at the 200-day EMA and $34.
I wasn't thrilled with the weekly chart as this looks like a very large rounded top. However, I liked that price bounced off strong support and is essentially in a trading range. If it can reach the all-time high, that would be a 17% gain.
Zim Integrated Shipping Services Ltd. (ZIM)
EARNINGS: 5/18/2022 (BMO)
ZIM Integrated Shipping Services Ltd. engages in the provision of shipping and logistics services. It offers shipping solutions, including the transportation of out-of-gauge cargo, refrigerated cargo, and dangerous and hazardous cargo. The company was founded on June 7, 1945 and is headquartered in Haifa, Israel.
Predefined Scans Triggered: P&F Spread Triple Top Breakout, Moved Above Upper Bollinger Band and P&F Double Top Breakout.
ZIM is down -0.59% in after hours trading. I covered ZIM on January 12th 2022. This was a heartbreaker. It pulled back immediately to the 50day EMA and triggered the stop, but then bounced and didn't stop until it was up 55%. Of course, it slid back down in April.
There is a nice breakout above the key moving averages from yesterday and a continuation of the breakout above the mid-April top. I do not like having to set a deep 9% stop. You could tighten it to be just below the February top to make it a bit more reasonable and in all honesty, tighter stops are a good idea right now. The RSI is now positive and the PMO triggered a crossover BUY signal today. There is a longer-term positive OBV divergence. Stochastics are rising and are above 80. Relative strength is rising across the board.
There isn't much data to discuss on the weekly chart as this one began trading in early 2021. The bounce off support at the 2021 highs is bullish. The weekly PMO is turning back around and the RSI is positive; although as I said we don't have enough data to really make any sweeping conclusions. If it can reach its all-time high, that would be an over 23% gain.
Don't forget, on Thursdays I look at reader-requested symbols, click HERE to shoot me an email. 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)
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 15% invested and 85% is in 'cash', meaning in money markets and readily available to trade with.
I'm required to disclose if I currently own a stock and/or may buy it within the next 72 hours.
"Technical Analysis is a windsock, not a crystal ball." - Carl Swenlin
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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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