Today I had plenty of reader requests to review and it was tough! Every chart had merits so if you did make a request, it is a good one. I had to pick just four. I did set it up that the four requests came from four different people.
I'm often asked about US Natural Gas (UNG) and this week was no exception. I opted not to include the chart, but here is my quick opinion. The PMO is still rising on UNG, but I did opt out of adding to my position as the PMO is decelerating its rise. If you didn't watch this week's DecisionPoint Trading Room, you may want to as Carl and I discussed UNG. It is set up better than it has been in weeks, but the recent pullback is taking some of the punch away from the chart.
All four of today's requests come from different sectors. The rally is broad this time around and so there are opportunities.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DKNG, EYPT, PANL and PMT.
Other Requests: NVEI, MCW, NNDM, MESA, DSGX, PLSE, OPEN, DGRW, IAC, ARI and FTNT.
** 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
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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.
DraftKings Inc (DKNG)
EARNINGS: 08/04/2023 (AMC)
DraftKings, Inc. is a digital sports entertainment and gaming company, which engages in the provision of online sports betting, online casino, daily fantasy sports product offerings, DraftKings Marketplace, retail sportsbook, media, and other consumer product offerings. The company was founded by Jason D. Robins, Matthew Kalish, and Paul Liberman on December 31, 2011 and is headquartered in Boston, MA.
Predefined Scans Triggered: New 52-week Highs and Stocks in a New Uptrend (Aroon).
DKNG is up +0.15% in after hours trading. We will file this under a 'winner that keeps on winning'. We don't have the breakout yet, but the indicators certainly suggest we'll see one here. The RSI is positive and not overbought. The PMO has turned up again, although it currently is on a SELL Signal. Stochastics are rising after bottoming well above 20. Relative strength is rising for the group. DKNG is a leader within the group based on relative strength and it is doing excellent against the SPY. I would've liked to have set the stop below the last low, but was too deep so I opted to go between the 20/50-day EMAs at 7.4% or $24.32.
This may be a difficult level of overhead resistance to overcome based on the weekly chart, but again, indicators are very positive and suggest the breakout will occur. The weekly RSI is very positive. The weekly PMO is looking a little weak, but it is still rising and isn't overbought. The StockCharts Technical Rank (SCTR) is at the very top of the "hot zone" above 70*. I conservatively marked the late 2020 low as upside potential, but certainly it could go much higher. I just don't want to get overly optimistic.
*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.
EyePoint Pharmaceuticals, Inc. (EYPT)
EARNINGS: 08/02/2023 (BMO)
EyePoint Pharmaceuticals, Inc. is a biopharmaceutical company, which engages in the development and commercialization of therapeutics that treat eye disorders. It offers FDA-approved sustained-release treatments in ophthalmology under the DEXYCU, ILUVIEN, Verisome, Retisert, and Durasert brands. The company was founded in 1987 and is headquartered in Watertown, MA.
Predefined Scans Triggered: Improving Chaikin Money Flow and Moved Above Upper Keltner Channel.
EYPT is up +0.73% in after hours trading. I almost didn't include this one because price has gotten overextended. However, the RSI is still below 70 so the rally doesn't have to end right away. Price is up against resistance right now, but indicators are suggesting an upside breakout. If after hours trading holds we could see that breakout very soon. The PMO just triggered a new Crossover BUY Signal above the zero line which implies internal strength. Stochastics are above 80. The Biotechs as a group aren't holding up right now so that is working against EYPT currently. However, it hasn't posed a problem of late as EYPT is showing excellent relative strength on its own. Given the major rally today, the stop has to be set deeply at 9% or $7.48. Position size wisely on this low-priced stock.
With its low price point, there is plenty of upside potential. The weekly RSI is positive and the SCTR is well within the hot zone above 70. The weekly PMO is rising strongly, but it is very overbought. I think price could test the next level of resistance at about $12.50 so upside potential is excellent. Just know that with a low-priced stock, the whipsaw could be hard to take.
Pangaea Logistics Solutions Ltd. (PANL)
EARNINGS: 08/08/2023 (AMC)
Pangaea Logistics Solutions Ltd. engages in the provision of seaborne dry bulk logistics and transportation services to industrial customers worldwide. The firm services customers that require transportation of dry bulk cargoes, including grains, coal, iron ore, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The company was founded by Edward Coll, Carl Claus Boggild, and Anthony Laura on April 29, 2014 and is headquartered in Newport, RI.
Predefined Scans Triggered: P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
PANL is unchanged in after hours trading. The Transportation group is enjoying a strong rally and PANL enjoyed it until two days of deep decline. I'm not sure why there was this decline, but price hit strong support and is rebounding, suggesting to me that it will breakout once again. The RSI is positive and not overbought. We have a new PMO "Surge" above the signal line (bottom above the signal line). Volume was heavy on the decline, but it is coming in on the current rally. Stochastics have just turned up above 20. The group is starting to see some relative strength against the SPY. PANL even with the decline, shows rising trends in relative strength. The stop is set around the 50-day EMA at 7.7% or $6.23. This is also a low-priced stock so position size wisely.
If this breakout holds, I would consider this a longer-term investment rather than a short-term trade. The weekly RSI is positive and not overbought. The weekly PMO is on a new Crossover BUY Signal. The SCTR is safely within the hot zone. Given it is near all-time highs, consider an upside target of about 16% or to $7.83.
PennyMac Mortgage Investment Trust (PMT)
EARNINGS: 08/01/2023 (AMC)
PennyMac Mortgage Investment Trust is a finance company, which invests primarily in residential mortgage loans and mortgage-related assets. It operates through following segments: Correspondent Production, Credit Sensitive Strategies, Interest Rate Sensitive Strategies, and Corporate Activities. The Correspondent Production segment deals with purchasing, pooling, and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage-backed securities in capital markets. The Credit Sensitive Strategies segment includes investments in distressed mortgage loans, real estate acquired in settlement of mortgage loans, real estate held for investment, credit risk transfer agreements, non-agency subordinated bonds, and small balance commercial real estate mortgage loans. The Interest Rate Sensitive Strategies segment focuses on investments in mortgage servicing rights, excess servicing spread, agency and senior non-agency mortgage-backed securities, and the related interest rate hedging activities. The Corporate segment includes management fee and corporate expense amounts and certain interest income. The company was founded by Stanford L. Kurland on May 18, 2009 and is headquartered in Westlake Village, CA.
Predefined Scans Triggered: P&F Double Top Breakout.
PMT is up +0.74% in after hours trading. After yesterday's breakout, price took a breather. This looks like a bull flag that has been confirmed with the breakout. The RSI is positive and not overbought. The weekly PMO has surged above its signal line. Stochastics are back above 80. If I had a complaint it would be the OBV declining tops v. price rising tops. Relative strength studies show PMT as well as the group outperforming. The stop is set beneath support at 6.8% or $12.57.
PMT has been in a long-term trading range and with positive indicators, I would look for price to hit all-time highs again. The weekly PMO is positive and rising. The weekly PMO just hit positive territory on a Crossover BUY Signal. The SCTR has inched its way back into the hot zone. Should it reach all-time highs, it would be an over 26% gain.
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 60% 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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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