It is clear there is a broad market rally on our hands with so many indicators sitting in oversold territory, there is a good chance it will continue. There were numerous results from the Diamond Scans today...hundreds. This is one of the reasons this report is going out a bit later than usual.
Two areas I found that were prevalent in the results were Semiconductors and Containers & Packaging. I selected one from each group and found a third from Medical Equipment with a ton of upside potential.
I'm working offsite today and won't be back home until tomorrow after the market closes, but I do want to add to my 8% exposure. Today's selections and some of the runners-up are on my list to review tomorrow when I get home. Hopefully I'll get home early enough to make some trades, but if I don't, that would be why my exposure could remain the same.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ISRG, ON and UFPT.
Runners-up: RDNT, APD, PEP, CHD, ARI, CSGP, FELE, HI, ITW, AMKR, RGLD, ROK, SGH and TER.
RECORDING LINK (8/25/2023):
Topic: DecisionPoint Diamond Mine (8/25/2023) LIVE Trading Room
Passcode: August#25
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When: Sep 1, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (9/1/2023) LIVE Trading Room
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Here is the last recording from 8/28:
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.
Intuitive Surgical, Inc. (ISRG)
EARNINGS: 10/17/2023 (AMC)
Intuitive Surgical, Inc. engages in the provision of robotic-assisted surgical solutions and invasive care through a comprehensive ecosystem of products and services. Its products include Da Vinci Surgical and Ion Endoluminal systems. The company was founded by Frederic H. Moll, John Gordon Freund, and Robert G. Younge in November 1995 and is headquartered in Sunnyvale, CA.
Predefined Scans Triggered: P&F Low Pole.
ISRG is up +0.15% in after hours trading. Price has bounced off strong support at the 200-day EMA and $290. It rallied strongly and nearly closed above the 50-day EMA. I like that both the 20/50-day EMAs are above the 200-day EMA so there is at least a bullish bias in the longer term. The RSI is positive now and the PMO is nearing a new Crossover BUY Signal. Stochastics are rising strongly in positive territory. The group may not be outperforming right now, but ISRG is outperforming both the group and the SPY. I've set the stop below the 200-day EMA at 7.5% or $287.11.
This looks more like a short-term trade given the weekly PMO is still in decline after the severe price decline. The weekly RSI is now positive on this rally and price is about to overcome longer-term resistance. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70. Upside potential is about 20%.
*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.
ON Semiconductor Corp. (ON)
EARNINGS: 10/30/2023 (BMO)
ON Semiconductor Corp. engages in the provision of power and sensing solutions, and technologies for electrification of the automotive industry. It operates through the following segments: Power Solutions Group (PSG), Advanced Solutions Group (ASG), and Intelligent Sensing Group (ISG). The PSG segment offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, including power switching, power conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. The ASG segment designs and develops analog, mixed-signal, advanced logic, application specific standard products, and application specific integrated circuits, radio frequency, and integrated power solutions. The ISG segment includes the design and development of complementary metal oxide semiconductor image sensors, image signal processors, single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image. The company was founded on July 4, 1999 and is headquartered in Scottsdale, AZ.
Predefined Scans Triggered: Elder Bar Turned Green, Parabolic SAR Buy Signals and P&F Double Top Breakout.
ON is down -0.31% in after hours trading. I took a look at our Semiconductors (SMH) chart on the website and did find that participation is expanding in a healthy way and felt that a "Diamond in the Rough" from this group was warranted. This could be a very short-term rally so be prepared to be nimble. I like this setup on ON given what appears to be a short-term double bottom. Price is back above the 20/50-day EMAs. The RSI has just entered positive territory and the PMO is showing new upside momentum. The OBV is confirming the rally. Stochastics are still in negative territory but are rising strongly. I picked ON from the group based on the outperformance that is coming in against the group and the SPY. The stop is set a little tighter than I'd like, but to put it beneath support would've made it too deep. You can adjust accordingly from 7.2% or $90.58.
Price is coming off strong support right now and even should price only return to where it was, it would be over 15% gain. The weekly RSI is positive. Unfortunately we need to keep this one on short leash given the weekly PMO Crossover SELL Signal. The SCTR is very good and has remained in the hot zone for months so it has a good foundation.
UFP Technologies, Inc. (UFPT)
EARNINGS: 11/01/2023 (BMO)
UFP Technologies, Inc. engages in designing and custom manufacturing of components, subassemblies, products and packaging utilizing specialized foams, films, and plastics primarily for the medical market. The firm manufactures its products by converting raw materials using laminating, molding, radio frequency and impulse welding and fabricating manufacturing techniques. It's single-use and single-patient devices and components are used in a wide range of medical devices, disposable wound care products, infection prevention, minimally invasive surgery, wearables, orthopedic soft goods, and orthopedic implant packaging. The firm also providing highly engineered products and components to customers in the automotive, aerospace and defense, consumer, electronics, and industrial markets. Its products include military uniform and gear components, automotive interior trim, athletic padding, environmentally friendly protective packaging, air filtration, abrasive nail files, and protective cases and inserts. The company was founded by Richard L. Bailly, Robert W. Drew, Sr. and William H. Shaw in 1963 and is headquartered in Newburyport, MA.
Predefined Scans Triggered: P&F Double Top Breakout.
UFPT is down -0.01% in after hours trading. This is another that has a bullish bias in the long term based on the 50-day EMA being above the 200-day EMA. The decline was severe but price has bounced before hitting the 200-day EMA and just above support at about $150. It is now up against resistance so we will likely see a bit of a pullback. The RSI has just moved into positive territory and the PMO is now rising toward a Crossover BUY Signal. Stochastics are rising strongly in positive territory. I like that relative strength is improving across the board. I've set the stop halfway down the prior trading range at 7.7% or $163.30.
The weekly RSI is positive, but the weekly PMO is on a Crossover SELL Signal and is still declining. Consider this a short-term. However, with the strong SCTR number, it does have internal strength available in the intermediate to long terms. If it gets back to all time highs it would be an over 16% 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 8% 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