The scans came up mostly empty with the exception of the PMO Surge Scan. I was able to find three ETFs based on that scan.
There was a bias on one of my scans toward the Energy sector. I found an interesting ETF that follows producers or companies that are tied to Natural Gas. I like UNG right now and this seemed an interesting way to play that given the surge above the PMO.
One of the ETFs is very good for those with a smaller risk appetite as it does tend to be a slow mover (although after hours trading may suggest otherwise). It is a Bond ETF that you may have heard of if you follow our ETF Tracker on the website, iShares Fallen Angels USD Bond ETF (FALN). (You'll find the ETF Tracker ChartList on the upper lefthand side of the Blogs and Links page).
The final ETF is an international one, India (INDA) which has been on an excellent run.
Tomorrow is Reader Request Day and so far I don't have any in my email. I am also open for mailbag questions.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": FALN, FCG and INDA.
** JULY VACATION **
I will be in Europe 7/14 - 7/28 so there will not be any Diamonds reports or trading rooms during that time. All subscribers with active subscriptions on 7/28 will be compensated with two weeks added to their renewal date.
RECORDING LINK (6/23/2023):
Topic: DecisionPoint Diamond Mine (6/23/2023) LIVE Trading Room
Passcode: June*23rd
REGISTRATION for 6/30/2023:
When: Jun 30, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/30/2023) 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 (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.
iShares Fallen Angels USD Bond ETF (FALN)
EARNINGS: N/A
FALN tracks a market value weighted index of bonds that were rated investment grade at issuance, but later downgraded to sub-investment grade. Click HERE for more information.
Predefined Scans Triggered: Elder Bar turned Green, New CCI Buy Signals, Moved Above Upper Price Channel and Parabolic SAR Buy Signals.
FALN is down -1.27% in after hours trading so a better entry is likely. Price did break out above near-term overhead resistance today and the indicators are looking bullish. The RSI is staying positive and is rising. There is a PMO Surge above the signal line (bottom above the signal line). Stochastics are nearing 80 and stayed in positive territory on the prior decline which is very positive. Since this one is typically a slow mover, a 4.4% stop is all that is necessary around $24.11.
The weekly chart is favorable given the positive weekly RSI and rising weekly PMO that surged above its signal line. I have annotated a prior double-bottom formation that is technically still in play. I didn't annotate what appears to be an ascending triangle that formed this year (flat top, rising bottoms). That is also a bullish pattern. The StockCharts Technical Rank (SCTR) has avoided the hot zone above 70*, but it is holding at an acceptable level given the indicators. Upside potential isn't great, but with a thin stop it works out. I like to have my upside target percentage be double my stop percentage.
*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.
First Trust Natural Gas ETF (FCG)
EARNINGS: N/A
FCG tracks US companies that derive a substantial portion of their revenue from the exploration & production of natural gas. Click HERE for more information.
Predefined Scans Triggered: Elder Bar turned Green.
FCG is down -0.88% in after hours trading. It's not the best chart I've ever presented, but as I said it was a tough day to find ETFs that fit my criteria. I decided that the PMO Surge made this one worth it. The RSI has also moved into positive territory. Stochastics are rising again and just moved above net neutral (50). Relative performance isn't really there, but it isn't really underperforming either. I've set the stop below support at 7.3% or $21.01.
The weekly chart looks very good to me. I see a large pennant on a flagpole that suggests and upside breakout ahead. It's hard to see, but the weekly PMO has turned up above the zero line. The weekly RSI is almost in positive territory above net neutral (50). The SCTR needs serious help, but it did form a higher low. This is a tough place to invest right now given the troubles with Crude Oil and Natural Gas so prepare for the longer haul on this one. It could take some time before it reaches that upside target.
iShares MSCI India ETF (INDA)
EARNINGS: N/A
INDA tracks a market-cap-weighted index of the top 85% of firms in the Indian securities market. Click HERE for more information.
Predefined Scans Triggered: New CCI buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Price Channel and Parabolic SAR Buy Signals.
INDA is unchanged in after hours trading. Price has been in a rising trend channel since April and with the recent bounce off the bottom of the channel, it is ready to continue to test the top of the channel. The RSI is positive, but is very close to overbought territory. The PMO has surged above its signal line and while the PMO looks overbought, it really isn't given the bottom of the range right now is -2. That means the top of the range will be +2. The OBV is confirming the rising trend and Stochastics just moved above 80. The stop can be set thinly, even thinner than I have set it. A break from the rising trend channel would have me hovering above the "sell" button. I've opted to set it below the 200-day EMA at 4.8% or $41.26.
I believe this can be considered an intermediate-term investment based on this favorable weekly chart. The weekly RSI is positive and not overbought. The weekly PMO has entered positive territory while on a Crossover BUY Signal. The SCTR is almost in the hot zone above 70. Upside potential is somewhat limited should it fail at the all-time high, but it is still more than twice the stop percentage.
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 55% 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
(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:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com