The market was clearly unhappy with the FOMC today given the late day crash. It certainly made finding ETFs interesting as there were tons of bearish candlesticks. I still found three ETFs that should weather the storm. I noted quite a few Bond charts looking good today. I nearly included the Municipal Bonds ETF (MUB), but upside potential on Bonds is limited. Here are two more Bond ETFs that caught my eye: TIPS and LQD. This makes sense if the market is ready for another down leg.
After peeking at some of the DP indicators that have come in, I do believe we have more downside ahead. Indicators were healthy and suggesting a rally into the end of the week, but now the Swenlin Trading Oscillators have turned down suggesting more serious deterioration underneath the surface.
I decided to go with the Singapore ETF (EWS) that I mentioned yesterday and I also found an Emerging Markets ETF (EEMV) that has a constructive chart.
The final selection is a more risky reversal trade. Palladium (PALL) has been beaten down but has paused and appears ready to reverse. Indicators are just starting to get ripe which is why I consider it more risky.
Stay safe and remember to keep your stops in play! I expect yesterday's selections to finish lower on the week as they were selected under different circumstances with DP indicators in line for more upside at the time.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": EEMV, EWS and PALL.
Runner-ups: CPER, EEM, MUB, GDX, TIPS and LQD.
RECORDING LINK (3/17/2023):
Topic: DecisionPoint Diamond Mine (3/17/2023) LIVE Trading Room
REGISTRATION for 3/24/2023:
When: Mar 24, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/24/2023) LIVE Trading Room
Register in advance for this webinar HERE.
After registering, you will receive a confirmation email containing information about joining the webinar.
Here is the last recording (3/20):
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 Edge MSCI Minimum Volatility Emerging Markets ETF (EEMV)
EEMV tracks an index of emerging markets firms selected and weighted to create a low volatility portfolio. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals.
EEMV is down -0.11% in after hours trading. As the name implies this one doesn't generally experience much volatility. Price is now right up against overhead resistance. It closed above the 50-day EMA today and indicators suggest a breakout. I didn't annotate a bullish double-bottom, but when I look at the close on the second low, I suppose it could be considered one. The RSI just hit positive territory above net neutral (50). The PMO triggered a crossover BUY signal today. Stochastics are rising strongly and should get above 80 shortly. Relative strength is angling higher. The stop can be set even tighter than I have listed due to low volatility, but I decided to go with a stop beneath the intraday low on the second price bottom at 4.5% around $51.35.
The weekly chart is favorable. The weekly RSI is back in positive territory and the weekly PMO has turned up above its signal line. The SCTR isn't in the "hot zone"*, but it is respectable at 59%. If the ETF can return to all-time highs, it would be an over 17% gain.
*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.
iShares MSCI Singapore ETF (EWS)
EWS tracks a market-cap-weighted index of Singaporean firms, covering top 85% of the market subjected to diversification requirements. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals and Shooting Star.
EWS is down -1.35% in after hours trading. I'm not surprised it is down due to today's bearish shooting star candlestick, but price held today's breakout and the indicators tell me it will likely pullback toward the breakout point and then rebound. The RSI is positive and the PMO triggered a crossover BUY signal today. Stochastics are rising strongly and should get above 80 soon. Relative strength is continuing to improve. The stop is set below support around 5.9% or $18.18.
The weekly RSI is back in positive territory and is rising. The weekly PMO is bottoming above its signal line which is especially bullish. The SCTR is well within the hot zone above 70. Upside potential on the conservative side is over 15%, but it could certainly retest the 2021 high.
abrdn Physical Palladium Shares ETF (PALL)
EARNINGS: 05/10/2023 (AMC)
PALL tracks the palladium spot price, less trust expenses. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green.
PALL is down -0.25% in after hours trading. This is a reversal play, pure and simple. The indicators are ripening so I may give this one a go using the stop I've listed at around 6.9% or $124.07. The RSI is still negative, but rising. The PMO has actually bottomed above its signal line which is especially bullish. Stochastics have turned back up but are still in negative territory.
Price bottomed before reaching strong support at the 2019 low which is a good sign and the weekly PMO is trying to turn back up. Other than that, it's not the greatest chart. The weekly RSI is very negative and the SCTR is about as low as you can go. This is a consequence of the slide coming out of the October high. Upside potential is very good at 22.6%.
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% long, 2% short. Under current conditions I am considering PALL and possibly adding another 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
(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