Yesterday we talked about Biotechs. They are continuing to move higher as expected. Scan results have opened up somewhat. Today saw multiple themes within in the results. One thing was very clear, Healthcare is on the move. There were three industry groups in particular in Healthcare: Biotechs, Healthcare Providers and Medical Equipment. I have two more Biotechs for you to look at.
Another interesting theme was Software, Banks and Food Products. I only had two in Food Products but I have both as "Stocks to Review". I wasn't a fan of the Software or Bank stocks. Maybe they will look better tomorrow.
We're finally starting to see "pockets of strength" where there were none. Currently I'm running a "Bear Market Special" for new subscribers. I'd like to extend it to you if you'd like to try the DP Alert for one month. As a current subscriber, I'll give you DP Alert for a month at only $9! You'll need to contact me directly to take advantage of adding DP Alert.
Don't forget to send in your symbol requests for "Reader Request Day" tomorrow!
Good Luck & Good Trading!
Today's "Diamonds in the Rough": ABBV, CERE and PLUG.
Stocks to Review: IBB, CPB and HSY.
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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.
AbbVie Inc. (ABBV)
EARNINGS: 7/29/2022 (BMO)
AbbVie, Inc. is a research-based biopharmaceutical company, which engages in the development and sale of pharmaceutical products. It focuses on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology, and dermatology, oncology, including blood cancers, virology, hepatitis C virus (HCV) and human immunodeficiency virus (HIV), neurological disorders, such as Parkinson's, metabolic, comprising thyroid disease and complications associated with cystic fibrosis, pain associated with endometriosis, and other serious health conditions. The company was founded on October 19, 2011 and is headquartered in North Chicago, IL.
Predefined Scans Triggered: Bullish MACD Crossovers, Parabolic SAR Buy Signals and P&F Low Pole.
ABBV is down -0.18% in after hours trading. I covered this one only last month on May 17th 2022 and unfortunately the stop triggered. I like it again and a reader requested I give it relook. Since it came up in my scans today, I figured I could help her out and present a nice chart. With Biotechs heating up, this is usually a good one to turn to. It didn't fulfill promises last time, but the group lost its relative strength right after I picked it. We don't actually have a breakout yet, but price did overcome the 20-day EMA. The RSI is now in positive territory. The PMO is nearing a crossover BUY signal. There is a slight positive divergence with the OBV. Stochastics aren't in positive territory yet, but they are looking good as they rise strongly. Relative strength of the group has already been established. This one is performing inline with the group so it is outperforming the SPY. You can set a stop below support at the 200-day EMA and short-term June bottom.
Price is rebounding off the 43-week EMA and early January high. The weekly RSI has landed in positive territory and the weekly PMO is turning back up. The SCTR is a strong reading of 94. Upside potential is near 19%.
Cerevel Therapeutics Holdings, Inc. (CERE)
EARNINGS: 8/9/2022 (BMO)
Cerevel Therapeutics Holdings, Inc. engages in the discovery and development of new therapies for neuroscience diseases. The firm's portfolio focuses on diseases such as schizophrenia, epilepsy, and Parkinson's disease. Its product candidates include CVL-231, Darigabat, Tavapadon, CVL-871, and CVL-936. The company was founded in 2018 and is headquartered in Cambridge, MA.
Predefined Scans Triggered: Elder Bar Turned Green and P&F Low Pole.
CERE is unchanged in after hours trading. There is a double-bottom in the making that implies an upside target that would take price to the April top. The RSI just entered positive territory today. Additionally, the PMO had a crossover BUY signal. The OBV is making new highs, but price is far from doing so. Since price follows volume, when volume pours in like that, price is supposed to rise. When that isn't happening we call it a "reverse divergence". The rest of the chart is positive enough that I'll forgive that one item. Stochastics are rising and relative strength is picking up. The target was difficult given the strong rally of the past three days. I set it below the late May/early June lows.
It's a toppy looking weekly chart, but strong support is being held. The weekly RSI is negative, but rising. The weekly PMO is trying to turn back up. I see a positive divergence between the OBV and price. The SCTR is acceptable at 65. Shows that there is room for improvement. It has been above 80 plenty of times prior and looks like its headed there again. Upside potential is excellent if the double-bottom executes as expected.
Plug Power, Inc. (PLUG)
EARNINGS: 8/4/2022 (AMC)
Plug Power, Inc. provides alternative energy technology, which focuses on the design, development, commercialization, and manufacture of hydrogen and fuel cell systems used primarily for the material handling and stationary power markets. Its fuel cell system solution is designed to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some distribution and manufacturing businesses. The company was founded by George C. McNamee and Larry G. Garberding on June 27, 1997, and is headquartered in Latham, NY.
Predefined Scans Triggered: P&F Double Top Breakout.
PLUG is down -0.06% in after hours trading. I've covered it twice before, August 10th 2021 and October 13th 2021. Both positions are closed. I hesitated to include this Renewable Energy stock as they are so volatile, so this is not for the faint of heart. I know I have readers out there who are interested in this group and looking at relative strength improving, I can see why. The set-up on this chart is very good. The RSI is about to hit positive territory. The PMO has whipsawed into a crossover BUY signal. There is a bullish double-bottom developing. It will be confirmed with a breakout above the June high. Stochastics are rising strongly and should hit positive territory very soon. Relative strength for PLUG has improved over the past week. The stop is set at the second May low. Just be careful. If the group sours, I'd stay away. At this point the group looks healthy.
The weekly chart is meh. We do see a rising RSI, but it's in negative territory. The PMO has decelerated, but is still in decline. The SCTR is an anemic 14.6. Yet, there is a nice positive OBV divergence that would tell us this rally should see a continuation. Being conservative, I've set the upside target just above the 2021 low.
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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 20% exposed with 10% hedge.
I'm required to disclose if I currently own a stock I mention and/or may buy/short 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."
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