I had zero results to my ETF scans this afternoon with the exception of an ultra bull on Natural Gas. While Nat Gas looks pretty good, I don't want to play its game of hot and cold price action. I certainly don't want to do so with an ultra ETF.
Consequently, today I had to scan not only our ETF Tracker (available to you on the Blogs and Links page, upper lefthand side), but also my rather exhaustive list of nearly every ETF covered by StockCharts. Shorting ETFs showed the most promise so I've included one. I decided that Corn was looking somewhat bullish.
Crude Oil and Energy shorting ETFs were also prominent in my visual scan, but I'm not bearish enough on Oil itself to lay out too many inverse positions. I did opt to go with the inverse of Energy (ERY) which isn't completely tied to Crude Oil. The sector has run hot and is ready to see a pullback or correction.
I don't know if you're able to short certain ETFs themselves, but I've included in my runners-up list a few that could offer some profit if you can short them. One is the Steel ETF, rather than short that particular ETF, you could look for a few names within that look particularly bearish. I'll remember this for tomorrow if needed.
Crude Oil and Energy shorting ETFs were also prominent in my visual scan, but I'm not bearish enough on Oil itself to lay out too many inverse positions. You could consider ERY which is the Energy Bear as well as DRIP. Keep a short-term timeframe on those positions.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CORN, ERY and YANG.
Runners-up: PALL (Short), SLX (Short), DBB (Short), DRIP, IVOL and RISR.
RECORDING LINK (9/29/2023):
Topic: DecisionPoint Diamond Mine (9/29/2023) LIVE Trading Room
Passcode: Sept#29th
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When: Oct 6, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (10/6/2023) LIVE Trading Room
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Here is the last recording from 10/2:
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.
Teucrium Corn Fund (CORN)
EARNINGS: N/A
CORN tracks an index of corn futures contracts. It reflects the performance of corn by holding Chicago Board of Trade corn futures contracts with three different expiration dates.
Predefined Scans Triggered: Elder Bar Turned Blue and Hollow Red Candles.
CORN is down -1.12% in after hours trading so a better entry should be available tomorrow if this holds. It's not the most bullish chart, but it has merit. The RSI is staying positive and the PMO is rising. Stochastics just moved above 80. It's in a tight trading range right now so you can set a thin stop of about 3.8% or $21.55.
If you aren't a fan of it right now, I'd keep it on the watch list because it is near very strong support that begs for a bounce. The weekly RSI is quite negative, but is rising. The weekly PMO is nearing a Crossover SELL Signal. The StockCharts Technical Rank (SCTR) is not in the hot zone* above 70, but it is rising vertically. If Corn can reach the top of the trading range it could be an over 25% 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.
Direxion Daily Energy Bear 2x Shares (ERY)
EARNINGS: N/A
ERY provides 2x inverse exposure to a market-cap-weighted index of US large-cap companies in the energy industry. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, Moved Above upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Upper Price Channel and Entered Ichimoku Cloud.
ERY is up +0.84% in after hours trading. Upon Energy's (XLE) breakdown below support, we now have ERY breaking out above resistance. There is a double bottom that led into this rally. The minimum upside target has been hit, but it is the 'minimum'. The RSI is positive and not overbought. The PMO is accelerating higher on a Crossover BUY Signal. Stochastics are above 80 now suggesting internal strength. This ETF is really starting to outperform the SPY. Since this is an "ultrashort", we have to have a deeper stop. I've opted to set it below the 20-day EMA at 9.2% or $24.76.
Price is coming off strong support. The weekly RSI is rising strongly and the weekly PMO is nearing a Crossover BUY Signal. I've marked a possible 40% gain, but that would require XLE to lose 20% and I think that is wishful thinking. I do see at least a 10% loss for XLE and that would translate to a 20% gain on ERY.
Direxion Daily FTSE China Bear 3x Shares (YANG)
EARNINGS: N/A
YANG provides daily 3x inverse leveraged exposure to a market-cap-weighted index of the 50 largest Chinese stocks traded in Hong Kong.
Predefined Scans Triggered: P&F Double Top Breakout and Bullish 50/200-day MA Crossovers.
YANG is down -0.74% in after hours trading. I've used this short ETF a few times with success during market declines. It should be considered a hedge and traded in the very short term. We have a price breakout combined with positive indicators. The RSI is positive and not overbought. The PMO is rising on a BUY Signal. The OBV is rising and confirming the rising price trend. Stochastics are above 80. It has been an excellent performer against the SPY. I've set the stop very thinly considering this is a 3x inverse so adjust accordingly. It's set at the 200-day EMA at 8.5% or $11.16.
Price is in a tight range, but if it can manage to reach the top of the range, it would be a 21% gain. Given the weekly PMO is accelerating higher and the weekly RSI just moved positive, I think that is very attainable.
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 10% long, 4% short. ERY is on my radar.
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 3:00p 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