As it sometimes happens, I didn't see much in the scan results. Three of the results were interesting, but not viable in my opinion. Two were sectors, Utilities (XLU) and Consumer Staples (XLP). While the charts look interesting, I don't see enough under the surface to list them as selections today.
The last ETF was the Turkey ETF (TUR). While the chart was bullish and appeared to have runaway gaps, I wasn't convinced the rally would continue. More than likely a pullback will be necessary first.
The three ETFs I selected were the only ones I found with good price action accompanied by new momentum. One you'll recognize, the Interest Rate Hedge ETF (PFIX). The other two were from industry groups that I think will perform well, Aerospace (ITA) and Regional Banks (KRE).
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ITA, KRE and PFIX.
RECORDING LINK (2/10/2023):
Topic: DecisionPoint Diamond Mine (2/10/2023) LIVE Trading Room
Passcode: Feb@10th
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When: Feb 17, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine 2/17/2023 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.
iShares U.S. Aerospace & Defense ETF (ITA)
EARNINGS: N/A
ITA tracks a market-cap-weighted index of US manufacturers, assemblers and distributors of airplane and defense equipment. Click HERE for more information.
Predefined Scans Triggered: New 52-week Highs and P&F Double Top Breakout.
ITA is unchanged in after hours trading. This one looks very good on the recent breakout. The RSI is positive and not overbought. The PMO is rising slowly and is far from being overbought. The OBV is confirming this breakout with a breakout of its own. Stochastics are oscillating above 80 suggesting internal strength. The stop can be set thinly at 4.7% around $112.05.
The breakout on the daily chart was impressive, but it is far more impressive on the weekly chart. This is breakout from major resistance at the 2020 bear market top. The weekly RSI is positive and not overbought. The weekly PMO is on a BUY signal and is definitely not overbought yet. The SCTR is an incredible 96.7%, hovering well into the "hot zone" above 70. We call it the "hot zone" because it implies that the stock/ETF is in the top 30% of its "universe" (large-, mid-, small-caps and ETFs) as far as trend and condition, particularly in the intermediate and long terms. Since it is at its highs, consider an upside target of about 15% near $135.22.
SPDR S&P Regional Banking ETF (KRE)
EARNINGS: N/A
KRE tracks an equal-weighted index of US regional banking stocks. Click HERE for more information.
Predefined Scans Triggered: Bullish Engulfing and P&F Double Top Breakout.
KRE is up +0.20% in after hours trading. While this isn't totally "new" momentum, it is an upside reversal on the PMO. A PMO bottom above the signal line is especially bullish. There is a large bull flag that is close to confirming. There was a tiny breakout, but I'd like a bit more confirmation with follow-through. As noted in the Predefined Scans Triggered above, it formed a bullish engulfing candlestick (today's candle body 'engulfs' yesterday's candle body). The RSI is positive and Stochastics have turned up in positive territory. Relative strength has been in decline, but I note that it looks like that is changing after today's rally. The stop can be set below support around 4.9% or $60.87.
It has been in a trading range for some time. It is on a weekly PMO BUY signal and the weekly PMO is now in positive territory. The weekly RSI is positive and not overbought. The SCTR isn't great, but it is reversing. Upside potential if it overcomes resistance is over 23%.
Simplify Interest Rate Hedge ETF (PFIX)
EARNINGS: N/A
PFIX is actively managed to provide a hedge against a sharp increase in long-term interest rates. The fund holds OTC interest rate options, US Treasurys, and US Treasury Inflation-Protected Securities (TIPS).
Predefined Scans Triggered: New CCI Buy Signals and P&F Low Pole.
PFIX is up +0.14% in after hour trading. Rates are on the rise again and this is an excellent way to take advantage. I've talked about this ETF many times and will generally bring up its name here and in the DP Alert when rates look bullish and Bonds look particularly bearish. We now have a positive RSI and a PMO crossover BUY signal. Stochastics have nearly reached territory above 80 suggesting internal strength. It's done relatively well against the SPY in the last few weeks. The stop is set below the early February low at about 7.7% or $57.46.
The weekly chart is favorable with the exception of the weekly PMO which is still falling. This bounce created another support level. The SCTR is excellent at 95.4%. Overhead resistance is nearing, but given the bullish daily chart and overall chatter, I would expect to see resistance tested near $75. That would be an almost 19% gain.
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
(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.com