Well, I hinted at what I might present today in yesterday's Diamond Report. While I didn't use all three ETFs that I mentioned yesterday, I am presenting two in that ballpark.
It wasn't a complete surprise to see this sector appear on my radar today given the weakness in the market. Rather than present the SPDR for <drum roll> Utilities (XLU), I found a Vanguard fund that follows Utilities. I like to bring new symbols to the table when I can and this one fits the bill.
I was going to present Silver Miners (SIL), but opted to just present Silver itself (SLV) and for Miners, I picked the Junior Gold Miners (GDXJ). Gold Miners continue to show strength, particularly in participation with most stocks above their 20/50/200-day EMAs. I believe GDXJ will also see a continuation of its rally.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": GDXJ, SLV and VPU.
Runner-ups: GDX, XLU, SIL and SILJ.
RECORDING LINK (3/10/2023):
Topic: DecisionPoint Diamond Mine (3/10/2023) LIVE Trading Room
REGISTRATION for 3/17/2023:
When: Mar 17, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/17/2023) 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 (3/13):
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 Junior Gold Miners ETF (GDXJ)
GDXJ tracks a market-cap-weighted index of global gold- and silver-mining firms, focusing on small caps. Click HERE for more information.
Predefined Scans Triggered: Bearish Engulfing.
GDXJ is up +0.26% in after hours trading so today bearish engulfing candlestick could fail to result in a decline tomorrow. Yesterday, GDXJ confirmed a double-bottom chart pattern. It saw continuation today, but ultimately resulted in a break back below the confirmation line. This isn't worrying me based on the bullish GDX chart that we present in the DP Alert everyday. As noted in the opening that group is seeing excellent participation. For GDXJ, we see a positive RSI and a new PMO BUY Signal in oversold territory. Stochastics are above 80 and rising strongly. We even see that GDXJ is outperforming the SPY right now. The stop is rather deep but I wanted it under support of the double-bottom. You could halve it if you don't want a stop at 8.1% around $32.28.
We see a bounce of strong support on the weekly chart. The weekly PMO is trying to trigger a crossover SELL signal which is not good, but the weekly RSI is improving and the SCTR is at the very top of the "hot zone"* above 70%. Upside potential is around 19%.
*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 Silver Trust (SLV)
SLV tracks the silver spot price, less expenses and liabilities, using silver bullion held in London. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals and Filled Black Candles.
SLV is up +0.05% in after hours trading so it may avoid a the down day that the bearish filled black candlestick implies. Gold is surging and Silver is likely benefiting. Today saw a ST Trend Model BUY Signal as the 5-day EMA crossed above the 20-day EMA. Price is stumbling at the 200-day EMA, but the RSI is positive and the PMO BUY Signal is strong in oversold territory. The OBV and volume bars are confirming the interest in Silver. Stochastics are above 80 and relative strength is building. The stop is set at gap support at the first breakaway gap around 6.2% or $18.76.
I like this week's break above resistance. The weekly RSI isn't above 50, but it is close enough as it is rising. The weekly PMO at first glance looks bearish, but notice that it is beginning to turn back up. That's impressive given this is the first week of rally after weeks of decline. The SCTR is excellent at 96.7%.
Vanguard Utilities ETF (VPU)
VPU tracks a broad-based, market-cap-weighted index of US utilities companies. Click HERE for more information.
Predefined Scans Triggered: None.
VPU is up +0.74% in after hours trading while its sister, XLU is up only +0.12% in after hours trading. It tracks to XLU but has slightly different exposure levels. I like the bullish double-bottom pattern that was confirmed on today's breakout move. The RSI just hit positive territory and the PMO has just triggered a crossover BUY Signal. Volume came in hot and heavy today. Stochastics are rising strongly in positive territory. Relative strength has been with the group all month. The stop is set below support at 5.2% around $138.83.
If it can get back to all-time highs it would be a 14.7% gain which is much higher than twice our stop which is my guideline for setting stops and targets. The weekly RSI is negative, but rising and should reach positive territory very soon. The weekly PMO has decelerated and with a little more upside, it will turn back up. Notice the intensity of the rise in the SCTR. We don't feel good about the market right now, but this defensive sector could see outperformance as it is considered a defensive sector.
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 10% long, 2% short.
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