Welcome to ETF Day! On Wednesdays I present three ETFs for your consideration. This week is a bit different than most. I didn't have any scans that triggered ETFs, but I did a thorough search for you. I came up with the teaser I talked about yesterday and two short ETFs.
Finding new momentum was the hard part, but I am pleased with the choices today.
Natural Gas (UNG) has hit all-time lows. It could certainly move lower but the PMO actually saw some upside movement this week. If you have the risk appetite, this one looks good. While I generally am not a "hungry" trader, I simply cannot pass up UNG right now. I'll be watching for a good entry tomorrow. Carl is already in.
Bitcoin has been rounding off and looks ready to break down. Looking at the inverse ETF (BITI), you'll see how bullish it is. YANG, the China Internet 3x Bear ETF is one I have traded before and there is a high likelihood that I will be again.
The main message today is that these are new momentum ETFs, very new and that does leave us holding more risk. I prefer more confirmation. Remember too, just because I express interest in a "Diamond in the Rough", you shouldn't run out and buy. I'm far from perfect. I recommend protecting yourself with hard stops on these.
Heads up, CEIX triggered its stop today by a mile, it had a very bad day. Interesting, it did just fine yesterday when it reported earnings.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BITI, UNG and YANG.
Runner-ups: KRE, IAI, IHF, KIE, XES, PPA, DUST and IMCG.
RECORDING LINK (2/3/2023):
Topic: DecisionPoint Diamond Mine (2/3/2023) LIVE Trading Room
Passcode: February#3
REGISTRATION for 2/10/2023:
When: Feb 10, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (2/10/2023) LIVE Trading Room
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Here is the last recording (2/6):
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.
ProShares Short Bitcoin Strategy ETF (BITI)
EARNINGS: N/A
BITI tracks the inverse daily price movements of an index of front-month CME bitcoin futures. It aims to profit from the price decline of bitcoin. For more information, click HERE.
Predefined Scans Triggered: P&F Descending Triple Bottom Breakdown and P&F Double Bottom Breakout.
BITI is down -0.46% in after hours trading. You can see the bottoming formation that is setting up a base for higher prices. It's very early. The RSI is still negative, but it is rising. The PMO is about to give us a crossover BUY signal and Stochastics are rising strongly, albeit in negative territory. I like that I can set a thin stop at 6.7% around $26.29.
There isn't enough data on BITI to provide a weekly PMO, but based on the perilous decline, I'm sure it would be pointed downward. The weekly RSI is seeing some improvement but is still negative. As you cans see, this one carries risk in that Stochastics and RSIs aren't yet confirming because they are in negative territory. If it does what I think it will, I would look for it to cover the gap and likely be ripe for even more upside. Upside potential is about 18.7%.
United States Natural Gas Fund (UNG)
EARNINGS: N/A
UNG holds near-month futures contracts in natural gas, as well as swap contracts. For more information, click HERE.
Predefined Scans Triggered: P&F Descending Triple Bottom Breakdown and P&F Double Bottom Breakout.
UNG is up +0.85% in after hours trading. It's interesting because I was really liking it after those two solid rally days. Today's breakdown was somewhat surprising given that, but it shows you that just because a stock is near or at all-time lows, it doesn't mean it is a sure thing. We are still vulnerable to a decline which is why we have a deep stop around 8.9% or $7.49. The RSI is not good, period. The PMO is bottoming, but did flatten on today's decline. I would've liked to have seen a follow-through day today. Stochastics are below 20 but are at a high for the year.
The weekly chart has nothing good to say except that price is at all-time lows. Upside potential is 39.8% if it hits the late 2022 low. My sense is that when UNG finds favor again, people will pile in and it should move higher than 40%. We're not the only ones watching UNG.
Direxion Daily FTSE China Bear 3x Shares (YANG)
EARNINGS: N/A
YANG provides daily 3x inverse leveraged exposure to a market-cap-weighted index of the 50 largest Chinese stocks traded in Hong Kong. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud and P&F High Pole.
YANG is up +0.55% in after hours trading. I actually used this one as a hedge against the market. The market is looking sketchy again so I might add this one as a hedge against a few of my other positions. The RSI just moved into positive territory and the PMO is rising out of oversold territory on a BUY signal. The OBV is confirming this short-term rally and Stochastics are above 80. Relative strength does appear to be on its way back up. The stop is set around 8.1% at $8.30.
The weekly RSI is negative, but is rising. The weekly PMO is falling on a SELL signal but has begun to decelerate. Price is just now overcoming resistance at the 2021 low which is the prior all-time low. Upside potential is over 50% in my estimation.
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. Will look to enter any of these three, particularly if they pullback again.
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
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.comB