The market turned over today and that likely limited our scan results, but I also believe it is a symptom of a market with weak internals. While I am presenting three long ideas, I would be very careful about expanding your portfolio. I shaved a position today. IBB is on the chopping block for me. My other positions are safe for now.
Don't want to say "I told you so..." about the Bank problems, but you know Carl and I have not been in favor of reentering the Financial sector and in fact, I am short this particular sector. I'm considering expanding to another inverse ETF. Be careful out there.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BLMN, FSS and SMPL.
** JULY VACATION **
I will be in Europe 7/14 - 7/27 so there will not be any Diamonds reports or trading rooms during that time. All subscribers with active subscriptions on 7/27 will be compensated with two weeks added to their renewal date.
RECORDING LINK (4/28/2023):
Topic: DecisionPoint Diamond Mine (4/28/2023) LIVE Trading Room
Passcode: April#28
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When: May 5, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (5/5/2023) LIVE Trading Room
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Here is the last recording (5/1):
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.
Bloomin' Brands Inc. (BLMN)
EARNINGS: 07/28/2023 (BMO)
Bloomin' Brands, Inc. engages in the acquisition, operation, design, and development of restaurant concepts. It operates through the U.S. and International geographical segments. The U.S. segment operates in the USA and Puerto Rico. The International segment operates in Brazil, South Korea, Hong Kong, and China. Its brands include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar. The company was founded by Chris Thomas Sullivan, Robert Danker Basham and John Timothy Gannon in March 1988 and is headquartered in Tampa, FL.
Predefined Scans Triggered: P&F High Pole.
BLMN is unchanged in after hours trading. Price is attempting to breakout from a bullish falling wedge. It does have overhead resistance to deal with at $25.00, but I like the way the indicators are shaping up in anticipation of a breakout. The RSI is in positive territory now and the PMO is about to trigger a Crossover BUY Signal. The OBV is confirming the rally and Stochastics are rising strongly. I'm beginning to wonder if Restaurants and Bars should be in Consumer Staples. Look at how impressive this group's relative strength has been. BLMN is now taking advantage of that strength. The stop is set below support at 7.8% or $158.85.
The weekly chart still has some work to do so I'd consider this a short-term trade. The weekly PMO is on a SELL signal. It is flat enough it could turn back up into a BUY signal, but it isn't currently. The SCTR is outside the "hot zone"* above 70, but it isn't terrible. My upside target would be 28.9%, but I'd consider booking profits at the 2023 high.
*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.
Federal Signal Corp. (FSS)
EARNINGS: 05/02/2023 (BMO) ** Reported TODAY **
Federal Signal Corp. engages in the design and manufacture of products and integrated solutions for municipal, governmental, industrial, and commercial customers. It operates through the Environmental Solutions Group and Safety and Security Systems Group segments. The Environment Solutions Group segment is involved in the manufacture and supply of street sweeper vehicles, sewer cleaners, vacuum loader trucks, hydro-excavation trucks, and water blasting equipment. The Safety and Security Systems Group segment offers comprehensive systems and products that law enforcement, fire rescue, emergency medical services, campuses, military facilities, and industrial sites use to protect people and property. The company was founded in 1901 and is headquartered in Oak Brook, IL.
Predefined Scans Triggered: Stocks in a New Downtrend (Aroon), New CCI Buy Signals, Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
FSS is unchanged in after hours trading. It did very well today after reporting earnings in the morning. Investors were already interested in this one as today is the fourth day of rally. The chart looks very healthy with a positive and not overbought RSI, a new PMO Crossover BUY Signal and a positive OBV divergence. Stochastics are rising strongly and should get above 80 soon. Relative strength has really picked up for FSS against the group. The group is doing slightly better than the SPY so we should see some follow-through. The stop is set at 7.5% below support around $49.35.
The weekly chart is positive enough to consider it somewhat intermediate-term. The weekly PMO is turning up so maybe look for it to crossover its signal line before holding it too long. The weekly RSI looks great in positive territory. The SCTR has just entered the hot zone.
The Simply Good Foods Co. (SMPL)
EARNINGS: 06/29/2023 (BMO)
The Simply Good Foods Co. is a consumer packaged food and beverage company, which engages in the development, marketing, and sale of nutritional food and snacking products. Its products include nutrition bars, ready-to-drink shakes, snacks, confectionery, and frozen meals under the Atkins and Quest brands. The company was founded on March 30, 2017 and is headquartered in Denver, CO.
Predefined Scans Triggered: Parabolic SAR Buy Signals.
SMPL is up +0.03% in after hours trading. We have a nice bullish double-bottom pattern that was confirmed with today's breakout. The RSI just entered positive territory and the PMO triggered a Crossover BUY Signal today. Volume is coming in based on the OBV. Stochastics are rising strongly in positive territory. Relative strength studies are positive with the stock and the industry group outperforming the SPY. The stop is set below support at 5.8% or around $35.10.
The weekly chart isn't impressive given the long-term trading range and mixed indicators. The weekly RSI is positive now. The weekly PMO is still on a Crossover SELL Signal, but it has flattened. The SCTR is not in the hot zone, but it is rising. Keep this one in the short-term column. Upside potential should it reach the top of the trading range would be 17.6%.
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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 28% long, 4% 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
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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