I was pleased with the results from today's scans and was able to find three solid "Diamonds in the Rough" and present you with some good "runners-up".
I wanted to remind you that using stops right now is very wise. The SPY saw a Price Momentum Oscillator (PMO) Crossover SELL Signal today. It is holding above near-term support but looks weak. I'm keeping my exposure at 40%, but every position (minus my buy/hold Gold and UNG) have stops set.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": OXY, SIGI and WFC.
Runners-up: HDSN, SF, CTAS, DECK, MCY and SAM.
RECORDING LINK (9/8/2023):
Topic: DecisionPoint Diamond Mine (9/8/2023) LIVE Trading Room
REGISTRATION for 9/15/2023:
When: Sep 15, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (9/15/2023) LIVE Trading Room
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Here is the last recording from 9/11:
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.
Occidental Petroleum Corp. (OXY)
EARNINGS: 11/07/2023 (AMC)
Occidental Petroleum Corp. engages in the exploration and production of oil and natural gas. It operates through the following segments: Oil and Gas, Chemical, and Midstream and Marketing. The Oil and Gas segment explores for, develops and produces oil and condensate, natural gas liquids and natural gas. The Chemical segment manufactures and markets basic chemicals and vinyls. The Midstream and Marketing segment purchases, markets, gathers, processes, transports and stores oil, condensate, natural gas liquids, natural gas, carbon dioxide, and power. The company was founded in 1920 and is headquartered in Houston, TX.
Predefined Scans Triggered: Elder Bar Turned Green, Moved Above Upper Bollinger Band, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
OXY is down -0.09% in after hours trading. The news is about Crude Oil prices likely rising and this should set a stock like OXY up for success. I really liked the PMO Surge above the signal line and the fact that the PMO is not overbought. The RSI is also not overbought. Stochastics had dropped below 80, but on today's big rally they tipped back upward. Admittedly there may be other choices within this industry group that have better relative strength against the group, but OXY is outperforming the SPY by quite a bit so I'll forgive its mediocre relative strength against the group. The stop is set at the 50-day EMA at 6% or $62.44.
OXY has formed a nice strong saucer-shaped base. The weekly RSI is positive and the weekly PMO is rising on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) isn't in the hot zone* but it is very close. I would look for a move to test 2022 highs for an over 15.5% gain.
*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.
Selective Insurance Group, Inc. (SIGI)
EARNINGS: 11/01/2023 (AMC)
Selective Insurance Group, Inc. is a New Jersey insurance holding company, which engages in the provision of property and casualty insurance products. It operates through the following segments: Standard Commercial Lines, Standard Personal Lines, E&S Lines, and Investments. The Standard Commercial Lines segment offers insurance products and services to commercial customers, such as non-profit organizations and local government agencies. The Standard Personal Lines segment consists of insurance products and services, including flood insurance coverage. The E&S Lines segment includes insurance products and services provided to customers who have not obtained coverage in the standard marketplace. The Investments segment includes premiums collected by various segments and engages in the issuance of debt and equity securities. The company was founded by Daniel L. B. Smith in 1926 and is headquartered in Branchville, NJ.
Predefined Scans Triggered: Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
SIGI is unchanged in after hours trading. The bullish falling wedge was confirmed with today's strong rally. The RSI has just moved into positive territory and the PMO is rising and nearing positive territory and a BUY Signal. I noticed a very nice positive OBV divergence (rising OBV bottoms, falling price bottoms) leading into this rally. Stochastics are rising and have moved above net neutral (50). Relative strength is building among insurance groups. Like OXY this one hasn't been spectacular against the group as far as relative strength, but it is starting to pick up strength against the SPY. The stop is set to accommodate a possible pullback at 6.7% or $93.98.
The weekly chart needs help so consider this a short-term trade. The weekly RSI is positive, but the weekly PMO is falling on a Crossover SELL Signal. The SCTR is not yet in the hot zone, but is somewhat respectable at 60.4. Upside potential could be considered around 17% or at $117.85.
Wells Fargo & Co. (WFC)
EARNINGS: 10/13/2023 (BMO)
Wells Fargo & Co. is a diversified, community-based financial services company. It is engaged in the provision of banking, insurance, investments, mortgage products and services, and consumer and commercial finance. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment offers banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment offers corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth & Investment Management segment provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services to affluent, high-net worth and ultra-high-net worth clients. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers, P&F High Pole and Parabolic SAR Buy Signals.
WFC is up +0.05% in after hours trading. Today's breakout was impressive as it took price not only above resistance at the April top, but also through the 20/50/200-day EMAs. While I'm still hesitant about investing in the Banks right now, this is a big name and is really showing relative strength leadership against the group. The RSI just moved into positive territory and the weekly PMO is turning back up. Stochastics just moved above 50. Banks showed a bit of relative strength today. I've set the stop below support at 6.4% or $39.81.
The weekly chart shows some promise, but I'd consider this short-term until the weekly PMO turns back up. For now the weekly PMO is nearing a Crossover SELL Signal. The weekly RSI did enter positive territory (red arrow should be blue), but the SCTR is outside of the hot zone. The SCTR is improving. There is a bull flag price pattern that implies we could get a move to test the 2021 high. Given the lukewarm nature of this weekly chart, I'm setting upside target lower than that at 15.3%.
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 40% 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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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.
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