Reader Requests came in nicely with plenty of charts to choose from. One interesting selection is a shorting opportunity. While I'm not that bearish at the moment, the chart has merits as a short.
The others came in all over the place, but I found the charts that I liked the best. There are still opportunities on the long side, we just have to uncover them using scans or in today's case, a request by a reader.
Don't forget to sign up for tomorrow's Diamond Mine trading room! Link is below the Diamonds logo.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ACEL, MED, MRK and PLTR (Short).
Other requests: PRCT, AMD (Short), DCGO, ELF, LQDA, MRNS, RDNT, MEDP, AAPL, AORT, MLM, MUSA, CASY and SPTN.
** 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 (6/16/2023):
Topic: DecisionPoint Diamond Mine (6/16/2023) LIVE Trading Room
Recording Link
Passcode: June*16th
REGISTRATION for 6/23/2023:
When: Jun 23, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/23/2023) 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 (6/12 - No Recording on 6/19):
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.
Accel Entertainment Inc (ACEL)
EARNINGS: 08/08/2023 (AMC)
Accel Entertainment, Inc. operates as a distributed gaming operator. It is involved in the installation, maintenance, and operation of gaming terminals, redemption devices that disburse winnings and contain automated teller machine (ATM) functionality, and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores. It also provides licensed establishment partners gaming solutions that appeal to players who patronize those businesses. In addition, the firm operates stand-alone ATMs in gaming and non-gaming locations, as well as amusement devices, including jukeboxes, dartboards, pool tables, pinball machines, and other related entertainment equipment. The company was founded by Andrew Rubenstein and Gordon Rubenstein on December 8, 2010 and is headquartered in Burr Ridge, IL.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, Stocks in a New Uptrend (Aroon) and Moved Above Upper Price Channel.
ACEL is up +1.94% in after hours trading. This one has rallied strongly the past two days out of a bull flag formation. I have a feeling the reason this reader came up with this stock was the PMO "Surge" above the signal line (bottom above the signal line). These are particularly bullish signals. The RSI is positive and not quite overbought yet. The OBV is confirming the rally as it jets higher. Stochastics are now back above 80. Based on the description, this seems an odd sector/industry group for this stock. Nonetheless, it is outperforming both the SPY and the group, which is good since the group is performing only in line with the SPY. The stop is set below support at 6.5% or $9.62.
Price is about to break above very strong overhead resistance. The weekly indicators suggest this could be considered an intermediate-term investment. The weekly RSI is positive, rising and not overbought. The weekly PMO is back in positive territory and rising. The StockCharts Technical Rank (SCTR) is within the "hot zone" above 70.* I've opted to mark upside potential to the next area of strong overhead resistance.
*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.
Medifast, Inc. (MED)
EARNINGS: 08/03/2023 (AMC)
Medifast, Inc. engages in the provision of healthy living products and programs. It offers the OPTAVIA brand, a lifestyle solution centered on developing new healthy habits through smaller, foundational changes called micro-habits. The firm's product line includes bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups. The company was founded by William Vitale in 1981 and is headquartered in Baltimore, MD.
Predefined Scans Triggered: New CCI buy Signals, Moved Above Upper Bollinger Band, P&F Double Top Breakout, P&F Triple Top Breakout and P&F Quadruple Top Breakout.
MED is unchanged in after hours trading. I love this chart. The rally is strong and price closed above the 50-day EMA for the first time since this intermediate-term decline began. It's in the Staples sector which I like right now. The RSI is positive and rising. The PMO is picking up speed on an oversold Crossover BUY Signal. Stochastics are above 80 and volume is coming in. The industry group isn't doing much, but MED is picking up relative strength as it rallies. The stop is set below the 20-day EMA at 6.5% or $82.26.
Upside potential is excellent and given price is turning up before testing support, we should see more rally. I'm not sure it will rally that high, but even halfway would be great. The weekly chart is starting to gel, but for now I would look at this as more of a short-term trade. The weekly RSI is negative, but rising. The weekly PMO has turned up and is nearing a Crossover BUY Signal. The SCTR is well outside the hot zone, but we are seeing some improvement.
Merck & Co., Inc. (MRK)
EARNINGS: 08/01/2023 (BMO)
Merck & Co., Inc. is a health care company, which engages in the provision of health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. It operates through the following segments: Pharmaceutical, Animal Health, and Other. The Pharmaceutical segment includes human health pharmaceutical and vaccine products. The Animal Health segment discovers, develops, manufactures, and markets animal health products, such as pharmaceutical and vaccine products, for the prevention, treatment and control of disease in livestock, and companion animal species. The Other segment consists of sales for the non-reportable segments of healthcare services. The company was founded in 1891 and is headquartered in Kenilworth, NJ.
Predefined Scans Triggered: New CCI BUY Signals, Moved Above Upper Bollinger Band, Parabolic SAR Buy Signals and P&F Double Bottom Breakout.
MRK is up +0.08% in after hours trading. This was an easy choice as it was on my list yesterday. Wishing I'd picked it given today's strong rally. I think there is more upside to be had. The RSI is positive and rising. There is a brand new PMO Crossover BUY Signal. There is a slight OBV positive divergence that led into this rally. We also have a bullish Adam and Eve double-bottom that needs to be confirmed with a break above the confirmation line which happens to also be overhead resistance. Stochastics are rising and relative strength studies suggest MRK is gaining strength. The stop is set beneath the chart pattern at 5.9% or $107.01.
The weekly chart is favorable enough to consider this a more intermediate-term investment. The weekly RSI is positive and rising off net neutral (50). The weekly PMO isn't rising just yet but has decelerated. The SCTR is outside the hot zone, but it is rising quickly and should reach above soon. Consider a 16% upside target around $131.91.
Palantir Technologies, Inc. (PLTR) - SHORT
EARNINGS: 08/07/2023 (AMC)
Palantir Technologies, Inc. is a holding company, which engages in the development of data integration and software solutions. It operates through the Commercial and Government segments. The Commercial segment offers services to clients in the private sector. The Government segment provides solutions to the United States (US) federal government and non-US governments. The firm offers automotive, financial compliance, legal intelligence, mergers and acquisitions solutions. Its products include Palantir Gotham and Palantir Foundry. The company was founded by Stephen Cohen, Nathan Dale Gettings, Joseph Lonsdale, Alexander C. Karp, and Peter Andreas Thiel in 2003 and is headquartered in Denver, CO.
Predefined Scans Triggered: P&F Double Bottom Breakout.
PLTR is down -0.36% in after hours trading. This is a very short-term trade as I believe the minute the market is done with digesting the previous rally, this one will reverse quickly. Much of the downside move has been accomplished so there may not be much more downside to take advantage of. Still, the chart is ugly so it could see a much bigger decline. The RSI is still in positive territory. The PMO is on a very overbought Crossover SELL Signal. There was a negative OBV divergence going into this decline. Stochastics are negative and not oversold. One thing working against this short is the industry group. Software is still outperforming the SPY. PLTR is losing relative strength quickly. The stop is set deeply to the upside on this short primarily due to today's deep decline. I've marked 9% as the upside stop or $15.31.
The weekly chart is still bullish which is another reason this should be considered very short-term in nature. The weekly RSI is no longer overbought. The weekly PMO is still rising strongly and the SCTR is at the top of the hot zone. This is definitely short-term. Downside potential is about 20% in my estimation.
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 45% 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.
Helpful DecisionPoint Links:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com