Today the scans were fairly productive. It highlighted to me where some of the strength currently is. My job is to find you new strength.
One of the selections comes from a group that is showing excellent relative strength and participation while another is from the aggressive Technology sector. The third is from Healthcare which is beginning to show some internal strength, the problem is you have to scour the sector for good trades as there still aren't that many out there.
Gold Miners are looking good given the new interest in Gold. We like Gold and do think this group has plenty of potential trades left. Silver is the unsung hero. I'll likely be covering Silver and Silver Miners tomorrow for ETF Day. That shiny metal is seeing some interest as Gold begins to rally.
Bonds made a big showing in my scans today. I may cover one of the ETFs in tomorrow's report as well, EBND which is the local bond ETF for emerging markets.
I can't promise that the ETFs I mentioned will hit tomorrow's report, especially if something more interesting is flagged in my scans.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AGI, ATEX and VRTX.
Runner-ups: EBND, SIL, SLV, FNA, GOLD, STAA, WEC, CNP, DRD, ARGX, RGLD and NEM.
RECORDING LINK (3/10/2023):
Topic: DecisionPoint Diamond Mine (3/10/2023) LIVE Trading Room
Passcode: March@10th
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When: Mar 17, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/17/2023) LIVE Trading Room
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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.
Alamos Gold Inc. (AGI)
EARNINGS: 04/26/2023 (AMC)
Alamos Gold, Inc. engages in the exploration, development, mining and extraction of precious metals. It operates through the following segments: Young-Davidson, Mulatos, Island Gold, Elchanate, Kirazli and Corporate and Other. The company was founded on February 21, 2003 and is headquartered in Toronto, Canada.
Predefined Scans Triggered: Moved Above Upper Price Channel.
AGI is up +0.09% in after hours trading. There are quite a few Gold Miners that look good, but this one had the best internal strength given price has remained well above its 200-day EMA and is already above the 5/20/50-day EMAs. There is a bullish double-bottom pattern that has been confirmed with the rally this week. The RSI is positive. We have a slight positive divergence between OBV lows (rising) and price lows (flat). Stochastics are rising strongly and as noted at the beginning of this paragraph, relative strength is fantastic against the group, telling us AGI is a leader in this area. The group has improved its relative strength so consequently AGI is showing excellent relative strength against the SPY. The stop is set just below the middle of the double-bottom pattern at 7.2% around $9.94.
The weekly chart is excellent with the exception of the weekly PMO which is vulnerable to a crossover SELL signal. It is beginning to rise though and could avoid that crossover. There is a beautiful bull flag on the weekly chart and this week's rally is breaking out of it, suggesting a move to the upside that could be the height of the flagpole. I don't want to appear overly optimistic about that, but certainly this chart calls for an extended rally. The StockCharts Technical Rank (SCTR) is well within the "hot zone"* above 70. It is 9.2% away from new 52-week highs, so consider an upside target around 17% to $12.54.
*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.
Anterix Inc. (ATEX)
EARNINGS: 05/25/2023 (AMC)
Anterix, Inc. operates as a wireless communications company. The firm focuses on commercializing spectrum assets to enable targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. It's solutions include Private LTE and Active Ecosystem. The company was founded by Peter Joel Lasensky and Richard Edward Rohmann in 1997 and is headquartered in Woodland Park, NJ.
Predefined Scans Triggered: P&F Double Bottom Breakout.
ATEX is unchanged in after hours trading. I spy a bullish double-bottom pattern that was confirmed on today's strong rally. I'm not a fan of this sector, but this is a pretty enticing chart. The RSI just moved into positive territory and the PMO triggered a crossover BUY signal today. Stochastics are rising strongly in positive territory suggesting internal strength. Relative strength is very good for the group in spite of being in a struggling sector right now and ATEX is showing strength against both the group and SPY. The stop would be too deep if I set it below the double-bottom due to today's over 4.4% rally, so I opted to set it at a level I would be comfortable with at 7.9% around $29.22.
It is really really early, but I could see a possible triple-bottom pattern developing. If price can reach the confirmation line of the pattern, it would be an over 25% gain. The weekly RSI is negative, albeit rising. The weekly PMO is on a SELL signal, but does appear to be flattening already. The SCTR is barely mediocre at 47.5%. The weekly indicators aren't great, so you should keep a close eye on this one and make sure you have set a stop. If the weekly chart firms up you can reset your stop and keep holding...but, the weekly indicators need to look more appetizing.
Vertex Pharmaceuticals Inc. (VRTX)
EARNINGS: 05/04/2023 (AMC)
Vertex Pharmaceuticals, Inc. is a global biotechnology company, which engages in the business of discovering, developing, manufacturing, and commercializing small molecule drugs for patients with serious diseases. The firm focuses on development and commercializing therapies for the treatment of cystic fibrosis, infectious diseases including viral infections such as influenza and bacterial infections, autoimmune diseases such as rheumatoid arthritis, cancer, inflammatory bowel disease and neurological disorders including pain and multiple sclerosis. The company was founded by Joshua S. Boger in 1989 and is headquartered in Boston, MA.
Predefined Scans Triggered: None.
VRTX is up +1.27% in after hours trading. I normally don't like stocks in trading ranges, but I'll make an exception here because price is at the bottom of the range and has nice upside potential. This is not a double-bottom developing. Those are reversal patterns and require the prior trend to be down. The RSI just moved into positive territory and the PMO had a positive crossover today. We have a very nice OBV positive divergence leading into this rally which means there is accumulation likely going on beneath the surface. Stochastics are rising strongly and relative strength is improving across the board for VRTX and the group itself. The stop can actually be set rather thinly at 5.1% around $280.19.
Upside potential is more than twice the stop level, but I believe it will move past that. In any case, I think an 11.6% gain is pretty good. My reluctance to set it higher is attributed to the weekly PMO looking so negative right now. The weekly RSI just moved into positive territory and the SCTR is just about in the "hot zone" above 70. If the PMO turns up, this one could be off to the races. Until then just keep your stop thin and your expectations reasonable.
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 13% long, 2% short. May hop on the GDX bandwagon.
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
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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