Today I saw well over a hundred results in my scans for just ETFs. There are many that are companions or sisters as they cover the same areas of the market. I had not only the SPY and similar funds hit scan results, but also international ETFs, small-cap funds and mid-cap funds. The charts were all bullish and most looked the same coming out of prior declines.
The rally is clearly broad or I wouldn't have had this many results. I narrowed it down to three thematic funds that you may recognize. It seems safe to expand your portfolio. I was unfortunately out of town this morning and didn't have a chance to trade as I would've liked to so my exposure remains at 8%. That will change tomorrow. I don't know how much longer we have for this rally so be sure to set stops if you haven't already.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BOTZ, FINX and IPAY.
Runners-up: ARKQ, PICK, EWS and EWY.
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.
Robotics & Artificial Intelligence Thematic ETF (BOTZ)
EARNINGS: N/A
BOTZ provides market- cap selected and weighted exposure to companies involved in the development and production of robots or artificial intelligence. Click HERE for more information.
Predefined Scans Triggered: None.
BOTZ is up +0.26% in after hours trading. As with all of these charts, price has reversed off support and is rallying strongly. The RSI is now positive and the PMO is in the process of triggering a Crossover BUY Signal today. Stochastics are rising strongly in positive territory. Relative strength is also picking up suggesting that investors still love AI. After the big decline, this is a good place to take advantage of new strength in a group that is likely to get attention. The stop is set at 7.1% or $24.92.
The weekly chart is mixed. Given there is a relatively new weekly PMO Crossover SELL Signal, I would consider this more short-term than intermediate-term. Should the weekly PMO turn up then you can start considering this for the intermediate term. The weekly RSI is positive and the StockCharts Technical Rank (SCTR) is in the hot zone*. Upside potential is about 15% which is more than double the stop level.
*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.
iShares Select Dividend ETF (DVY)
EARNINGS: N/A
DVY tracks a dividend-weighted index of US companies. The index selects roughly 100 stocks based on dividend yield from a broad market-cap universe. Click HERE for more information.
Predefined Scans Triggered: Bullish MACD Crossovers.
DVY is up +0.81% in after hours trading. This ETF pays a pretty good dividend given it is made up of dividend payers. I like the cup shaped price bottom that occurred above support. The RSI is currently negative, but a rally day will put it above net neutral (50). The PMO is showing new momentum as it goes in for a Crossover BUY Signal. Stochastics are rising, suggesting we will see some follow-through on the rally off support. This one is for the more risk averse as you can have a thin stop with decent upside potential. The stop is set at 4.5% or $108.46.
This one doesn't have an exciting weekly chart. Price action has been mostly sideways. We are attempting to take advantage of its eventual move back up to overhead resistance. The weekly RSI is rising and the weekly PMO is still avoiding a Crossover SELL Signal. The SCTR is terrible. Consider this one a short-term trade for now.
ETFMG Prime Mobile Payments ETF (IPAY)
EARNINGS: N/A
IPAY tracks an index of global equity in credit card firms, and companies providing payment infrastructure, payment services, payment processing and payment solutions. Click HERE for more information.
Predefined Scans Triggered: None.
IPAY is down -0.74% in after hours trading. It appears to be pulling back after a nice few days of strong rally. This makes sense here given overhead resistance isn't far away. The RSI is almost above net neutral (50) and the PMO has turned up. Stochastics are rising, suggesting we will see the rally continue. Volume is really coming in on this ETF. I would set a thin stop at 4.8% around $40.06.
The weekly chart isn't impressive so consider this short-term in nature. Price has been moving sideways in a trading range, but appears poised to test the top again which would provide a decent 13%+ gain. The weekly RSI is rising and could get above 50 should the rally continue to finish the week. The weekly PMO has triggered a Crossover SELL Signal and the SCTR is in the basement. Think short-term.
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. All of this week's Diamonds and runners-up are on my review list tomorrow.
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