I had a generous amount of scan results today so the market is clicking. The main concern is watching for overbought conditions. With the rally becoming so broad, the statistics are on our side so let's take a look at today's "Diamonds in the Rough".
I had one theme come through loud and clear and that was Auto Parts. I had about four stocks come up in this area or related to this area so I found two.
The final selection is Ulta Beauty (ULTA) which is in the Consumer Discretionary sector. It's been beat down but appears ready to reemerge.
Watch Making Money with Charles Payne tomorrow at 2p ET! I may be on it for a brief interview where I'll likely be talking about Consumer Discretionary and Auto Parts. If not tomorrow, soon!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AZO, GPC and ULTA.
Runner-ups: OTTR, COLL, MDT, ALL, BAX, TRV, PLL, TRU and WT.
** 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 (6/9/2023):
Topic: DecisionPoint Diamond Mine (6/9/2023) LIVE Trading Room
Recording Link
Passcode: June#8th (Sorry about mixing up the date in the password)
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When: Jun 16, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/16/23) LIVE Trading Room
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Here is the last recording (6/12):
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.
Autozone Inc. Nevada (AZO)
EARNINGS: 09/18/2023 (BMO)
AutoZone, Inc. engages in the retail and distribution of automotive replacement parts and accessories. The firm offers ALLDATA, which produces, sells, and maintains diagnostic and repair information software used in the automotive repair industry and E-commerce, which includes direct sales to customers. The company was founded by Joseph R. Hyde, III on July 4, 1979 and is headquartered in Memphis, TN.
Predefined Scans Triggered: Bullish MACD Crossovers and P&F Double Top Breakout.
AZO is unchanged in after hours trading. We have a bullish double-bottom if you use the intraday low from late May. Price confirmed the pattern with yesterday's breakout and today is a continuation. These charts aren't perfect but they are definitely improving. The RSI is negative, but rising. The PMO is finally scooping up into a Crossover BUY Signal. Volume is coming in on this rally and Stochastics are rising. This stock isn't a relative leader in the group, but it has relative strength against the SPY which is paramount. The stop can be set thinly at 5.7% or $2282.95.
This is a short-term trade based on the weekly chart. The weekly RSI is negative, although rising now. The weekly PMO is falling and showing only slight deceleration. The StockCharts Technical Rank (SCTR) is in the basement and far away from the "hot zone" above 70*. It is rising though. Upside potential should it reach all-time highs again is over 14%.
*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.
Genuine Parts Co. (GPC)
EARNINGS: 07/26/2023 (BMO)
Genuine Parts Co. engages in the distribution of automotive and industrial replacement parts. It operates through the following segments: Automotive Parts Group, Industrial Parts Group, and Corporate. The Automotive Parts Group segment distributes replacement parts, other than body parts for substantially all makes and models of automobiles, trucks, and other vehicles. The Industrial Parts Group segment offers a range of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components, and related parts and supplies. The company was founded by Carlyle Fraser on May 7, 1928, and is headquartered in Atlanta, GA.
Predefined Scans Triggered: Improving Chaikin Money Flow.
GPC is down -0.35% in after hours trading. It's been on a tear so we could see a bit of a pullback, but today's breakout above the January low looks good. It will need to get above the 200-day EMA to avoid a "death cross" of the 50/200-day EMAs. The RSI is positive now and we have a brand new PMO Crossover BUY Signal. Volume has been steady. Stochastics are rising strongly and should get above 80 tomorrow. Relative strength studies are positive and suggest follow-through after the rally is digested. The stop is set below the March low at 5.4% or $150.53.
Another weak weekly chart so this should also be considered a short-term trade. The weekly RSI is rising, but in negative territory. The weekly PMO has decelerated, but is still falling and the SCTR is very weak at 19.2%. If it can reach prior all-time highs, it would be a 17.1% gain.
Ulta Beauty, Inc. (ULTA)
EARNINGS: 08/24/2023 (AMC)
Ulta Beauty, Inc. engages in the retail of beauty products. The company has one reportable segment, which includes retail stores, salon services, and e-commerce. Its products include makeup, skin care, tools and brushes, fragrance, and bath and body. Ulta was founded on January 9, 1990, and is headquartered in Bolingbrook, IL.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
ULTA is down -0.04% in after hours trading. I like this rebound that is setting up the covering of the downside gap from late May. This is still very early which is why the RSI is still negative. This was a strong breakout and suggests to me follow-through ahead. The PMO is nearing a Crossover BUY Signal and volume is coming in. Stochastics are still negative, but they are rising. Relative strength is positive for ULTA against the group and the SPY. We know that this group is outperforming in a big way. The stop is a bit deep, but that is due to the 4.44% upside move today. I've set it at 7.7% or $409.59.
This is another short-term trade as it is still early in this current rally and the weekly chart looks bearish. The weekly RSI is rising, but it is deep in negative territory. The weekly PMO is falling quickly lower with little to no deceleration. The SCTR is in the basement. This breakout was significant given the level of overhead resistance it just overcame. Upside potential is 26.5%, however, until this chart firms up more, that may be optimistic.
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 40% long, 0% 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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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.
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Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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