Today I bring you charts from three different sectors. Interestingly, one is in the aggressive Consumer Discretionary (XLY) sector while another is from the defensive Consumer Staples (XLP) sector.
The third comes from the Technology (XLK) sector in Software. I had planned on finding a Materials (XLB) stock as I liked the new momentum I saw in this sector yesterday. However, I wasn't able to find one that I wanted to present. There two listed in the "Runners-up", LIN and PPG which are both chemical companies.
The market is within a period of unfavorable seasonality; we're only about halfway into that cycle so we should be prepared for this period of digestion in the market to morph into more of a correction. Hence adding a defensive stock to the list today, Casey General (CASY).
Wingstop (WING) had a great chart that I was watching today. It is on my watch list currently and appears ready for prime time now.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CASY, ROP and WING.
Runner-ups: ZBRA, EME, HTZ, AMP, LIN and PPG.
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Topic: DecisionPoint Diamond Mine (6/23/2023) LIVE Trading Room
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When: Jun 30, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/30/2023) LIVE Trading Room
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Here is the last recording (6/26):
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.
Caseys General Stores, Inc. (CASY)
EARNINGS: 08/08/2023 (AMC)
Casey's General Stores, Inc. engages in the management and operation of convenience stores and gasoline stations. It provides self-service gasoline, a wide selection of grocery items and an array of freshly prepared food items. The firm offers food, beverages, tobacco products, health and beauty aids, automotive products, and other non-food items. The company was founded by Donald F. Lamberti in 1959 and is headquartered in Ankeny, IA.
Predefined Scans Triggered: None.
CASY is unchanged in after hours trading. It nearly saw a bullish engulfing candlestick today. In any case, it was a strong rally continuation. Price did get above resistance. The RSI is now positive and there is a new PMO Crossover BUY Signal. Stochastics are also rising strongly and should find their way above 80 soon. Relative strength is rising against the SPY for both the industry group and CASY. CASY also happens to be outperforming the group. I've put the stop below support at 5.6% or $214.97.
The weekly chart is improving, although the StockCharts Technical Rank (SCTR) ticked lower while outside the "hot zone" above 70*. The weekly RSI is positive now and the weekly PMO is trying to rise toward a crossover. We can that the level of resistance that was overcome today, also coincides with the 2021 high. That's a very good development. I would consider an upside target around 16% or $264.17.
*If a stock is in the "hot zone" above 70, it implies that it is stronger than 70% of its universe (large-, mid-, small-caps and ETFs) primarily in the intermediate to long terms.
Roper Technologies, Inc. (ROP)
EARNINGS: 07/21/2023 (BMO)
Roper Technologies, Inc. is a diversified technology company, which engages in the provision of engineered products and solutions for global niche markets. It operates through the following segments: Application Software, Network Software, and Technology Enabled Products. The Application Software segment includes Aderant, CBORD/Horizon, CliniSys, Data Innovations, Deltek, Frontline Education, IntelliTrans, PowerPlan, Strata, and Vertafore. The Network Software segment is composed of ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, and SoftWriters. The Technology Enabled Products segment refers to CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, and Verathon. The company was founded by George D. Roper on December 17, 1981, and is headquartered in Sarasota, FL.
Predefined Scans Triggered: Elder Bar turned Green, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Triple Top Breakout.
ROP is unchanged in after hours trading. ROP broke out in a big way today on a new PMO Crossover BUY Signal. The RSI is positive and rising. The Software group has seen strong outperformance all year and while of late it hasn't been a stellar performer, it is doing well enough. ROP is showing new strength against the group and consequently the SPY. The stop can be set thinly below support at the January top around 4.4% or $450.15.
Price broke out and then had its pullback. It is now ready to roll again. The weekly RSI is positive and the weekly PMO has surged above the signal line (bottom above the signal line). While the SCTR isn't in the hot zone, it is pretty close. It's close to all-time highs again so consider an upside target around 16% or $546.21.
Wingstop Inc. (WING)
EARNINGS: 08/03/2023 (BMO)
Wingstop, Inc. is a franchisor and operator of restaurants, which engages in the provision of cooked-to-order, hand-sauced, and tossed chicken wings. The company was founded in 1994 and is headquartered in Addison, TX.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers, Parabolic SAR Buy Signals, Entered Ichimoku Cloud, P&F Double Top Breakout and P&F Bearish Signal Reversal.
WING is down -1.01% in after hours trading so some profit taking appears to be occurring. This will offer a better entry. We have a confirmation of a bullish falling wedge with today's breakout move. The RSI is now in positive territory and the PMO has turned up. Volume is really coming in right now so interest in this stock is high. Stochastics are rising near vertically but are still in negative territory. This isn't a surprise given the intermediate-term decline that formed this bullish falling wedge. Relative strength for the group is in line with the SPY which is okay, not great given the pause in the market. WING is starting see some outperformance against the group and the SPY. The stop can be set below support at 6.4% or $183.54.
The weekly PMO is the only problem with the weekly chart right now and its decline makes sense given the intermediate-term decline we talked about above. It could reverse here as it holds a strong rising trend still. The weekly RSI is positive, rising and not at all overbought. The SCTR is well within the hot zone above 70. Upside potential is over 15% should it reach all-time highs again.
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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 45% long, 0% short. WING is on the radar.
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:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com