Not one ETF came up in my scans today so I had to do an exhaustive review of my huge ETF Listings ChartList. The ETF Tracker ChartList was too small and didn't produce any ETFs that I liked.
What I learned from this exercise is that there are basically zero ETFs with rising PMOs out there other than inverse ETFs and PFIX, the Interest Rate Hedge ETF which I presented on August 2nd.
I did find one ETF on the buy side. It was a winner for us in February and I expect it will produce to the upside this time around as well. The other two ETFs are shorts. I've listed the other inverse ETFs I liked in the "Runner-ups" list.
Consider the short ETFs as hedges that will need to be watched carefully. I don't foresee a market reversal at this time, but if it does reverse, you need to be nimble and paying attention.
If I were giving sell signals on prior "Diamonds in the Rough", I'd probably have been turning off most of the selections last week. I expect the spreadsheet to see a lot of red on Friday based on this downturn.
I had wanted to add a Biotech, but at this point I am going to keep my exposure limited. I own the Technology 3x inverse (TECS), but am considering the 2x inverse of Gold Miners (DUST) which I'm presenting today. The other short ETF is also on my radar.
Be careful out there! Send in your requests for tomorrow's report when you can. I'm curious if you're finding anything.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BDRY, DUST and HDGE.
Runner-ups: QID, DOG, DRV, DWSH, RWM, SRTY and FAZ.
RECORDING LINK (8/11/2023):
Topic: DecisionPoint Diamond Mine (8/4/2023) LIVE Trading Room
Passcode: August#11th
REGISTRATION for 8/18/2023:
When: Aug 18, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (8/18/2023) LIVE Trading Room
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Here is the last recording from 8/14:
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.
Breakwave Dry Bulk Shipping ETF (BDRY)
EARNINGS: N/A
BDRY tracks an index of long-only exposure to the nearest calendar quarter of dry bulk freight futures contracts on specified indexes. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles.
BDRY is unchanged in after hours trading. I don't like that today it saw a bearish filled black candlestick, but it closed above resistance and I'll take that. I like that this rally is picking up. This is trying to go parabolic. That can be a bad thing, but we're early enough that I think we will get to tag along for nice reward like we did in February. The RSI is rising, positive and not overbought. The PMO is rising on a BUY Signal and should reach above the zero line soon. Stochastics are above 80 and relative strength is improving against the SPY. Volume is certainly picking up even on two filled black candlesticks the last two days. The stop is set at the 20-day EMA at 8% or $5.19.
The weekly chart shows price bouncing of strong support at the 2020 low. The weekly RSI is rising, although still in negative territory. Most importantly the weekly PMO has turned up on this rally. You can see that nice bump on the OBV. Unfortunately it has an incredibly low StockCharts Technical Rank (SCTR) that is nowhere near the hot zone*. While upside potential could reach over 80%, I would play it safe and take a 20% gain no problem. It is possible it could reach overhead resistance, it just doesn't seem probable.
*If a stock/ETF 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.
Direxion Daily Gold Miners Index Bear 2x Shares (DUST)
EARNINGS: N/A
DUST provides 2x inverse exposure to a market-cap-weighted index of global gold and silver mining firms. Click HERE for more information.
Predefined Scans Triggered: P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
DUST is up +0.36% in after hours trading. This industry group is on the ropes and dropped beneath support yesterday. Today it saw a "death cross" of the 50/200-day EMAs (chart is included with commentary in the DP Alert daily). It is leveraged 2x so be aware of that. I like that given overhead resistance is near and I believe GDX has an opportunity to reverse on that level. Until then I see it free falling. The RSI is positive and not quite overbought. The PMO is accelerating its move higher. The OBV is confirming this rally and Stochastics are looking very strong above 80. Obviously with a rally like its had, it is outperforming the SPY by a mile. The stop is set beneath support at 7.7% or $12.78.
I had to make this a log-scale chart so we could see price action. It looks like a reverse head and shoulders with a declining neckline. The weekly RSI is rising and the weekly PMO is about to cross above the zero line on a Crossover BUY Signal. Upside potential is listed at 22% as that is about where I expect GDX to reverse.
AdvisorShares Ranger Equity Bear ETF (HDGE)
EARNINGS: N/A
HDGE is actively-managed fund that attempts to achieve positive returns by shorting US-listed companies believed to have low earnings quality or use aggressive accounting policies. Click HERE for more information.
Predefined Scans Triggered: P&F Descending Triple Bottom Breakdown, Improving Chaikin Money Flow, Moved Above Upper Keltner Channel, Stocks in a New Uptrend (Aroon) and P&F Double Bottom Breakout.
HDGE is up +0.27% in after hours trading. I like that this is a managed fund and I like the philosophy behind it. Price is about to reach resistance, but the market has lost support and I would look for this one to continue higher from there. This isn't a leveraged fund which I also like. The RSI is rising and not overbought. The PMO is on a Crossover BUY Signal and rising confidently. Volume is coming in right now. The OBV looks very positive as it confirms the rally. Stochastics are above 80 and still rising. It is outperforming the market. The stop was easy to set right below support at 7.9% or $20.16.
Price is rising off multi-year lows and is traveling within a bullish falling wedge. The weekly RSI is negative but rising. The weekly PMO is decelerating its decline. Given this is a hedge, I don't really want to get to crazy with upside potential. I decided to put it at the 2nd quarter high.
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 15% long, 4% short. May add DUST or HDGE.
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