"Diamonds in the Rough" finished lower by 0.85%, but the SPY finished down -2.05%. We had one Biotech that took the average down this week as it didn't fare well in the current bearish bias. We'll take it!
The one poor performing Biotech hit its stop on Friday. The Dry Bulk Shipping ETF also didn't perform well, but the stop was not hit and the position could still be considered a "hold".
The "Darling" this week was not surprisingly the Gold Miners 2x Bear ETF (DUST) which finished up +3.25%. I like its chances moving forward given the very bearish Gold Miners (GDX) chart which shows very little participation and a new 'death cross'.
The Sector to Watch is just that, a sector to WATCH. It currently does not have rising momentum and participation is negligible, but Utilities (XLU) are a defensive group and they are near longer-term support.
The Industry Group to Watch comes from Consumer Discretionary (XLY) sector which has only this group as a bright spot. Again, I would consider leaving your exposure low. Nonetheless, I have a few symbols within the group for your review.
See you next week!
Good Luck & Good Trading,
Erin
RECORDING LINK (8/18/2023):
Topic: DecisionPoint Diamond Mine (8/18/2023) LIVE Trading Room
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Topic: DecisionPoint Diamond Mine (8/25/2023) LIVE Trading Room
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Our latest DecisionPoint Trading Room recording (8/14):
A few items about the spreadsheet: I've put on the spreadsheet whether the RSI is positive (green) or negative (red). The PMO column tells you if it is rising (green) or falling (red). Finally I've added my own "Sparkle Factor" that gives you my assessment going forward, bullish (green), bearish (red) or neutral (gray). The Sparkle Factor is basically my thoughts on whether I expect it to rise or fall. A neutral means it could really go either way so it could be added to a watch list. If you're in a stock I consider "neutral" going forward, the ball is in your court.
Darling:
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.
Below are the commentary and chart from 8/16:
"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."
Here is today's chart:
This was honestly an easy pick given the very bearish set up on the Gold Miners ETF (GDX). We don't see overhead resistance until it reaches above $16 and I believe it will make its way up there. If we want something to worry about on the chart, the RSI is overbought. The PMO is near-term overbought, but given it has reached below -10 previously, we know the upside range is more than where it is currently sitting. I still like this one going forward, I own it.
Don't forget, on Thursdays I look at reader-requested symbols, so shoot me an email at erin@decisionpoint.com. I read every email I receive and try to answer them all!
Dud:
Bio-Techne Corporation (TECH)
EARNINGS: 11/01/2023 (BMO)
Bio-Techne Corp. engages in the development, manufacture and sale of biotechnology reagents and instruments for the research and clinical diagnostic markets. It operates through the following segments: Protein Sciences and Diagnostics and Genomics. The Protein Sciences segment develops and manufactures purified proteins and reagent solutions most notably cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies. This segment also includes protein analysis solutions that offer researchers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. The Diagnostics & Genomics segment develops and manufactures diagnostic products, including FDA-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for OEM and clinical customers, as well as a portfolio of clinical molecular diagnostic oncology assays, including the ExoDx Prostate (IntelliScore) test (EPI) for prostate cancer diagnosis. This segment also manufactures and sells advanced tissue-based in-situ hybridization assays (ISH) for research and clinical use. The company was founded in 1976 and is headquartered in Minneapolis, MN.
Predefined Scans Triggered: Parabolic SAR BUY Signals
Below are the commentary and chart from 8/15:
"TECH is down -0.13% in after hours trading. Price has now reached overhead resistance, but based on the positive indicators, I'm expecting a breakout. The RSI is positive and the PMO is nearing a Crossover BUY Signal. Stochastics are rising strongly. Relative strength against the group is up and down, but overall it has shown leadership among the Biotechs. It is outperforming the SPY. The stop is set below support at 6% or $79.53."
Here is today's chart:
This is why I generally stay away from the Biotechnology group. It is far from homogenous and picking wrong can mean quite a lot of downside. This one was the last pick I made when I was narrowing down what would be "Diamonds in the Rough" as it was highly volatile which can be dangerous in Biotechnology. At the same time, this was an incredible short-term decline that really was not expected based on the bullish characteristics it had when it was picked. The loss of the short-term rising trend would've been your clue not to get into this one.
THIS WEEK's Sector Performance:
DecisionPoint Sector Scoreboard (Mechanical Trend Model Signals):
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Utilities (XLU)
As noted in the opening, this is a sector to "watch" not get involved in right away. It has reached significant support and indicators are about as oversold as they can get. If the PMO turns up and we see some added participation, this could get interesting in a market decline given it is a defensive sector. It certainly looks better than its other sister defensive sectors of Healthcare (XLV), Consumer Staples (XLP) and Real Estate (XLRE). I do note it is really in a trading range and doesn't offer a huge amount of upside potential, it just could turn out to be a bright spot coming off these oversold lows.
Industry Group to Watch: Apparel Retailers ($DJUSRA)
This group looks like it has potential to break out of overhead resistance given the positive RSI and new PMO Crossover BUY Signal. Stochastics are also rising nicely. It is definitely outperforming the market right now. Could it be related to Back to School? Maybe. The technicals do suggest more upside. In the Diamond Mine we managed to dig out a few symbols from this group that may interest you: CTRN, TJX, DLTH and ANF.
Go to our Under the Hood ChartList on DecisionPoint.com to get an in-depth view of all the sectors. On StockCharts.com you can find the Industry Summary.
Good Luck & Good Trading!
- Erin
erin@decisionpoint.com
Full Disclosure: I'm 15% long, 4% short.
Watch the latest episode of the DecisionPoint Trading Room with Carl & Erin Swenlin on Mondays 3:00p EST!
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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 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 selection of "diamonds in the rough."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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