The character of the market has shifted to bullish. We now see far better participation of stocks across the board. Consequently I had many more stocks to review than usual. It was very hard to narrow down the stocks to present today, but I think I have three names that look good moving forward.
I do have a very long list of Runner-Ups and it could've been much much bigger, but part of my job is to do the culling for you. I still hated hitting that delete key as many times as I did.
I have expanded my exposure to 20% and have let all of my short positions go. I'd like to add more tomorrow. We are still vulnerable to a decline, but with so many stocks now seeing rallies and price moving above key moving averages, we have inherently less risk at picking a loser.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ALRM, EQT and IVZ.
Runner-Ups: ENSG, ABNB, DHI, PBF, ALV, FHI, SUPN, THC, XRAY, DOW, SLVM and VTR.
** 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 (6/2/2023):
Topic: DecisionPoint Diamond Mine (6/2/2023) LIVE Trading Room
Recording Link HERE
Passcode: June#2nd
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When: Jun 9, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/9/2023) LIVE Trading Room
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Here is the last recording (6/5):
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.
Alarm.com Holdings, Inc. (ALRM)
EARNINGS: 08/08/2023 (AMC)
Alarm.com Holdings, Inc. engages in the provision of wireless and web-enabled security system technology. The firm offers security, video monitoring, and energy management solutions. It operates through the Alarm.com and Other segments. The Alarm.com segment represents cloud-based platform for the connected home and related connected home solutions. The Other segment focuses on the research and development of home and commercial automation, as well as energy management products and services. The company was founded by Jean-Paul Martin and Alison J. Slavin in 2000 and is headquartered in Tysons, VA.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
ALRM is unchanged in after hours trading. The reason this one is on the list today is the PMO "Surge" above the signal line (PMO bottom above the signal line). The rest of the indicators look healthy too, but the PMO looks especially good. The RSI is positive and not overbought. Stochastics turned up mostly in positive territory. The group has been doing quite well as we know and ALRM is beginning to catch up to the group, now performing in line with the group and outperforming the SPY. Price hasn't broken out yet, but I expect it to after today's strong rally. The stop is set beneath price support at 6.4% or $48.28.
The weekly chart looked better than I had expected given price has technically been traveling sideways for some time. Instead I found a newly positive weekly RSI and a weekly PMO rising on a BUY signal. The StockCharts Technical Rank (SCTR) is not in the "hot zone" above 70*, but it isn't in the basement either. I think we should be able to get to overhead resistance at the 2023 top for an over 17% gain.
*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.
EQT Corp. (EQT)
EARNINGS: 07/26/2023 (AMC)
EQT Corp. is a natural gas production company, which engages in the supply, transmission, and distribution of natural gas. The company was founded in 1888 and is headquartered in Pittsburgh, PA.
Predefined Scans Triggered: Elder Bar Turned Green, P&F Bullish Catapult, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
EQT is down -0.03% in after hours trading. I hadn't intended to include an Energy position, but the rounded, saucer-shaped price pattern kept drawing me back to this chart. It has the added benefit of a bullish engulfing candlestick today. Another bonus on the chart is the PMO Surge above the signal line. The RSI has been positive since early May. Stochastics had also been in decline, but they reversed in positive territory. The group isn't really performing much which is why I wasn't going to go with Energy, but EQT is a clear outperformer against both the group and the SPY. The stop is set beneath the 200-day EMA at 7.8% or $34.44.
The weekly chart is very bullish. We have a positive and not overbought RSI along with a relatively new PMO Crossover BUY Signal. The SCTR just moved into the "hot zone". This has some great upside potential at 33.5%. Another symbol to look at would be PBF.
Invesco Ltd. (IVZ)
EARNINGS: 07/26/2023 (BMO)
Invesco Ltd. engages in the investment management business. Its product includes mutual funds, unit trusts, exchange-traded funds, closed-end funds, and retirement plans. The company was founded in December 1935 and is headquartered in Atlanta, GA.
Predefined Scans Triggered: New CCI Buy Signals.
IVZ is unchanged in after hours trading. This appears to be a "V" Bottom formation. Once the left side of the "V" is retraced by 1/3rd, you should expect a rally over and above the left side of the "V". We also have a large double-bottom pattern forming. The RSI is positive and rising. The PMO is on a BUY Signal and Stochastics have risen above 80. Volume is definitely coming in and isn't diminishing along the way. The stop couldn't be set below the "V" as it would've been too deep. I decided to set it below the small gap between Thursday and Friday's trading at 6.5% or $14.76.
The developing double-bottom pattern is easily visible on the weekly chart. This chart needs some work given the weekly RSI is negative and the weekly PMO is on a SELL Signal. The weekly PMO is still in decline, but flattened quickly with this week's rally. The SCTR is terrible, but we do see it is turning back up. Consider this a more short-term trade.
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 20% 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