Today is ETF Day! Every Wednesday I choose three ETFs that are "Diamonds in the Rough". Many don't like to trade individual stocks so this is an excellent way to serve all of you.
I had many of the "same" ETFs show up in the scans today which set up today's theme. It was clear that Technology is the place to be and the market in general. The majority of ETFs mimicked each other on the market overall. VTI, Vanguard's Total Market ETF was on the list as well as various versions of the Russell 2000, S&P 500, S&P 400, S&P 600 and growth in general. However, past those, I found various versions of the Technology sector.
The 2x leveraged bullish ETFs in Technology, ultra Tech (ROM) and the ultra QQQ ETF (QLD), were on the list, but I always opt to give you the non-"juiced" version whenever possible.
Renewable Energy looks great, but I'm afraid we've missed much of the gains to be had, but take a look at TAN and two solar companies, JKS and MAXN. Both showed up yesterday in my scans (after their performance today, I'm wishing I'd picked them!).
That's it for themes. Technology should lead any prolonged market rally.
First thing Monday morning, DecisionPoint will be raising subscription prices substantially. Your rate will always stay the same as long as you continue to subscribe and keep your account in good standing. Tell your friends and colleagues to check us out now before prices go up! I'll give you a free month for any referrals.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": IYW, QCLN and SKYY.
Runner-ups: QLD, ROM, INFL, IXN, MGK, TAN, VTI and VGT.
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RECORDING LINK (1/6/2023):
Topic: DecisionPoint Diamond Mine (1/6/2023) LIVE Trading Room
Start Time: Jan 6, 2023 09:00 AM PT
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When: Jan 13, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (1/13/2023) LIVE Trading Room
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Here is the last recording (no recording on 12/26 or 1/2):
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.
iShares U.S. Technology ETF (IYW)
IYW tracks a market-cap weighted index of US technology companies. Click HERE for more information.
Predefined Scans Triggered: P&F Double Top Breakout and Strong Volume Gainers.
IYW is down -0.17% in after hours trading. It confirmed a bullish double-bottom this week and broke out above overhead resistance today. The RSI just moved into positive territory and the PMO generated a crossover BUY signal today. Volume is rising based on the OBV and Stochastics are above 80. Relative strength is just now starting to move higher. The stop is set below the double-bottom pattern at 7% around $72.00.
Price does have overhead resistance arriving at the 2020 top and 2021 bottom. We have a large bullish falling wedge. The RSI is rising, but in negative territory below net neutral (50). The weekly PMO is bottoming above its signal line which is especially bullish. The OBV is confirming the rising trend. The StockCharts Technical Rank (SCTR) is terrible at a measly 6.7%, but it is characteristic of its difficult 2022. I'm looking at price to challenge the resistance level at $95.
First Trust NASDAQ Clean Edge Green Energy Fund (QCLN)
QCLN tracks a market-cap-weighted index of US-listed firms involved in clean energy. Click HERE for more information.
Predefined Scans Triggered: Bullish MACD Crossovers and P&F High Pole.
QCLN is up +0.49% in after hours trading. I will likely buy this one tomorrow unless my after hours limit order goes through between now and then. Besides the great technicals, this ETF incorporates all of the stocks that I believe are in for rallies. TSLA is beatdown as are some of the other automakers in this ETF. Solar is going crazy right now so I like the idea of getting on that band wagon at the same time. The RSI just moved into positive territory and the PMO triggered a crossover BUY signal today. There is a lovely OBV positive divergence with price (rising OBV bottoms, falling price bottoms). Stochastics are rising strongly and should be above 80 soon. Relative strength is kicking up with this breakout in the overall market. The stop is set fairly thin at 6.7% or $47.18.
Normally I don't like range-bound stocks, but this one is right at the bottom of the range and begs to move to the top of the range. The weekly PMO is turning back up. The SCTR is horrible, but it is at the bottom of its trading range. The weekly RSI is negative but at least rising. This looks like an ETF on the cusp of a real rally. I obviously could be wrong and the market has been treacherous. Make sure you have a stop in play so I can sleep at night.
First Trust Cloud Computing ETF (SKYY)
SKYY tracks an index of companies involved in the cloud computing industry. Stocks are modified-equally-weighted capped at 4.5%. Click HERE for more information.
Predefined Scans Triggered: None.
SKYY is down -0.15% in after hours trading. The double-bottom was confirmed given price closed above the confirmation line. It is currently at short-term resistance at the late November/early December lows, but the indicators look great. The RSI just moved into positive territory. The PMO had a recent crossover BUY signal and Stochastics are almost above 80. Relative strength is picking up this week. The stop is a little deep at 7.7% or $54.72, but I wanted it to be as close to the lows of the double-bottom.
The weekly RSI is negative as with the other two "Diamonds in the Rough", but as noted, it is a function of the long-term declining trend. The weekly PMO is bottoming above the signal line which is especially bullish. The SCTR is sickly, but again the ETF is beatdown.
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 12% exposed. I own SKYY. Stalking the other two tomorrow.
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
(c) Copyright 2023 DecisionPoint.com
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.
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