I had a total of three scan results today for ETFs and I didn't like any of them. So, I had to do a lot of eyeballing of charts in my ETF ChartLists. It shouldn't worry you that I didn't have a ton of results, it is mostly due to the small universe that is being scanned.
Nonetheless, I was able to pick out a handful of ETFs that look good. One shouldn't surprise you. Gold Miners ETF (GDX) has been on fire and after a small pause it is back at it, breaking above resistance. We cover GDX in the DP Alert so we actually have "under the hood" indicators. They're telling a good story right now.
One of the selections does have very low average daily volume. It's technically below my average daily volume threshold, but not by too much. I listed the Coffee ETF (JO) yesterday as a "runner-up" and I still like it.
Finally the last selection is Uranium (URA). This ETF is also a winner that should keep on winning. Lithium (LIT) was a close second, but ultimately I chose URA.
Tomorrow is Mailbag and Reader Request Day. Email your questions and requests before Noon PT tomorrow and I just might pick your symbol or question! Feel free to send more than one symbol too!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GDX, JO and URA.
Runner-ups: LIT, DRV, GDXJ, XME, ARKK and XRT.
RECORDING LINK (1/20/2023):
Topic: DecisionPoint Diamond Mine (1/20/2023) LIVE Trading Room
Passcode: January#20
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When: Jan 27, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (1/27/2022) LIVE Trading Room
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Here is the last recording (1/23):
Welcome to DecisionPoint 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.
Stop levels are all rounded down.
VanEck Vectors Gold Miners ETF (GDX)
EARNINGS: N/A
GDX tracks a market-cap-weighted index of global gold-mining firms. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Price Channel and P&F Double Top Breakout.
GDX is up +0.24% in after hours trading. This is one strong group. You may recall that I brought GDXJ, Junior Gold Miners ETF (I own GDXJ) to the table in early November. It follows the same path as GDX. Both charts look great, but I have more information on GDX as far as 'under the hood' indicators so I selected it this time. Today's breakout was excellent, bringing it above the June top. Next up is 40.00 and I believe it can make it there. The RSI is positive and not quite overbought. The PMO has bottomed above its signal line. It is on the overbought side, but I'll talk about that in a minute. Stochastics are oscillating above 80 and the OBV is steadily rising. As far as overbought conditions, you'll note that participation is very overbought with nearly 100% of stocks above their 20/50/200-day EMAs. The Silver Cross Index is above 96%. The Golden Cross Index isn't overbought and it is at a healthy 69%. Note back in February and March how overbought the indicators were. Notice they held that condition for weeks and weeks. In a bull market (which GDX is in), overbought conditions can persist. The stop is set at 6.9% around 30.97.
Everything is going well on the weekly chart as well, suggesting this could turn out to be an intermediate-term trade as well as a short-term trade. The weekly RSI is positive and not overbought. The weekly PMO is rising and is no where near overbought. The StockCharts Technical Rank (SCTR) is at an outstanding 99.3%. The SCTR tells you how the ETF ranks among all other ETFs that are tracked by StockCharts as far as trend and condition primarily in the intermediate to long terms. Upside potential is over 23%.
iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO)
EARNINGS: N/A
The iPath® Series B Bloomberg Coffee Subindex Total ReturnSM ETNs (the "ETNs") are designed to provide exposure to the Bloomberg Coffee Subindex Total ReturnSM(the "Index"). The ETNs are riskier than ordinary unsecured debt securities and have no principal protection. The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity or upon redemption, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. An investment in the ETNs involves significant risks, including possible loss of principal, and may not be suitable for all investors. The Index reflects the returns that are potentially available through an unleveraged investment in the futures contracts on coffee. The Index currently consists of one futures contract on the commodity of coffee which is included in the Bloomberg Commodity Index Total ReturnSM. Click HERE for more information.
Predefined Scans Triggered: P&F Low Pole.
JO is up +0.36% in after hours trading. I'd never heard of this one before, but I love the symbol that alludes to "a cup of Joe". This one has been beat down and it is now coming back to life. Today saw a Short-Term Trend Model BUY signal as the 5-day EMA crossed above the 20-day EMA. The RSI is positive and rising. The PMO just triggered a crossover BUY signal and Stochastics got above 80 today. You'll note that since bottoming it has been showing great strength against the SPY. The stop is set below the prior trading range at 5.6% around 44.13.
The bounce occurred perfectly on support. The weekly RSI isn't healthy, but given it is rising and JO has been so beat down, I'll accept it, but maybe keep this is more short-term than intermediate-term. The weekly PMO has turned up in oversold territory. It did this on the prior rally and failed so again keep this on a short leash if you dip your toes in Coffee. Upside potential is set conservatively at 17%, but it certainly has the potential to rise further.
Global X Uranium ETF (URA)
EARNINGS: N/A
URA tracks a market-cap-weighted index of companies involved in uranium mining and the production of nuclear components. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon) and Moved Above Upper Price Channel.
URA is up +0.48% in after hours trading. Today it formed a bullish engulfing candlestick which suggests another up day tomorrow. The RSI is positive and not quite overbought yet. The PMO is rising on an oversold crossover BUY signal and the OBV is confirming the rally with a rise of its own. Stochastics are oscillating above 80 and relative strength is excellent, and has been since mid-December. I set the stop at the 200-day EMA and prior low, but you could tighten it up to just below the November high if you wish. The stop is at 7.9% around 20.98.
The weekly chart looks great with the weekly RSI rising and in positive territory and the weekly PMO rising on a relatively new crossover BUY signal. The OBV really holds a positive divergence in my mind given price lows are mostly flat and OBV bottoms are rising. Upside potential is over 24%.
Don't forget, on Thursdays I look at reader-requested symbols, click HERE to send 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 am 15% exposed.
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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Watch the latest episode of DecisionPoint Trading Room 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."
Regarding BUY/SELL Signals: The signal status reported herein is based upon mechanical trading model signals and crossovers. They define the implied bias of the price index/stock based upon moving average relationships and momentum, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
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