Reader Requests were lighter today than I would've thought given the change in the market to the upside. Of course, it was a bad day today. The requests that did come in all had merit. I picked my favorite four that includes a juiced ETF for the Semiconductors (SOXL).
Please read yesterday's report regarding juiced or leveraged ETFs. They should be used very carefully. I tend to avoid them unless their leveraged exposure doesn't have a matching non-leveraged ETF.
A note about candlestick formations. Today we have three out of four with bearish engulfing or filled black candles. These are one day patterns and don't speak for what will happen past that day. Sometimes they can be pivot points so a close watch of the indicators is needed. I think the indicators for those three charts are bullish enough not to worry about those candles. Just be prepared for a possible decline tomorrow.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": IR, SOFI, SOXL and ZS.
Other requests: SQ, PLUG, PLTR, LLY, VECO and FANG.
RECORDING LINK (10/6/2023):
Topic: DecisionPoint Diamond Mine (10/6/2023) LIVE Trading Room
Passcode: October@6
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When: Oct 13, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (10/13/2023) LIVE Trading Room
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Here is the last recording from 10/9:
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.
Ingersoll Rand Inc (IR)
EARNINGS: 11/01/2023 (AMC)
Ingersoll Rand Inc. provides technology-driven flow creation and industrial solutions across 40+ respected brands. It operates through two segments: Industrial Technologies and Services & Precision and Science Technologies. The Industrial Technologies and Services segment has a broad Range of Compressor, Vacuum and Blower Solutions as well as Industrial Technologies Including Power Tools and Lifting Equipment. The Precision and Science Technologies segment is Highly Specialized Fluid Management Solutions Including Precision Liquid and Gas Pumps and Niche Compression Technologies. The company was founded in 1872 and is headquartered in Davidson, NC.
Predefined Scans Triggered: New CCI Buy Signals, Filled Black Candles and Parabolic SAR Buy Signals.
IR is unchanged in after hours trading. This one is already on a great run but based on the new PMO Crossover BUY Signal, we should expect more upside. Price is not overbought based on the RSI and it is showing internal strength based on Stochastics being above 80. Volume is increasing on the rally which is bullish. I like the longer-term relative strength of IR against the SPY. It is beginning to outperform the industry group now. The stop is set beneath support at 6.5% or $61.76.
I do not like the weekly PMO as it is in decline and not really showing any deceleration given this is the first week of rally. The good news is that the StockCharts Technical Rank (SCTR) is in the hot zone* above 70. That tells us that in spite of the weekly PMO there is internal and relative strength in the intermediate and longer terms. The weekly RSI is not overbought. It is getting toward all-time highs so I would consider an upside target of about 17% or $77.29.
*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.
SoFi Technologies, Inc. (SOFI)
EARNINGS: 10/30/2023 (BMO)
SoFi Technologies, Inc. is a financial service platform, which engages in the provision of student loan refinancing options to the private student loan market. It offers home loans, personal loans, and credit cards. It operates through the following segments: Lending, Technology Platform, and Financial Services. The Lending segment includes personal loan, student loan, home loan products, and related servicing activities. The Technology Platform segment focuses on technology products and solutions revenue. The Financial Services segment includes the SoFi Money product, SoFi Invest product, SoFi Credit Card product, SoFi Relay personal finance management product, and other financial services such as lead generation and content for other financial services institutions. The company was founded in 2011 and is headquartered in San Francisco, CA.
Predefined Scans Triggered: P&F Double Bottom Breakdown and P&F Bullish Signal Reversal.
SOFI is down -0.12% in after hours trading. Today's candle is bearish engulfing so we may see another day of decline. Today's was pretty big so that may've done the job of cooling the current rally. The RSI is positive and the PMO continues to rise on a Crossover BUY Signal in spite of today's big drop. Stochastics were not ruffled by the decline either as they continue to rise above 80. We have a bullish double bottom that does imply a move to at least $9.25 if not further. The stop is set beneath support at summer lows at 7.8% or $7.73.
The weekly chart needs a little work given the weekly PMO is in decline. But, as with IR, the SCTR is in the hot zone so we can forgive the weekly PMO for now (it does look like it is decelerating slightly). The weekly RSI is in positive territory. I've marked upside potential at 42% which match with the 2023 high.
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
EARNINGS: N/A
SOXL provides 3x daily exposure to a modified market-cap-weighted index of 30 US-listed semiconductor companies.
Predefined Scans Triggered: P&F Double Top Breakout.
SOXL is down -0.39% in after hours trading. The market struggled today, but Semiconductors did not. Participation has expanded greatly in this sector, enough to certainly keep the rally going after the recent correction. The technicals are good based on the positive RSI, PMO Crossover BUY Signal and Stochastics above 80. It has certainly been outperforming the market in general. This is juiced so keep your position small or opt for a larger position in the non-leveraged SMH. The stop is set beneath the August low at 7.5% or $19.12.
As with most juiced ETFs, upside potential is excellent, it just carries a lot of risk with it. The weekly PMO is in decline so we don't want assume that this rally will go on past the short term. The weekly RSI did just move above net neutral (50). I didn't annotate it, but I see a bullish falling wedge coming out of the 2023 high.
Zscaler, Inc. (ZS)
EARNINGS: 12/07/2023 (AMC)
Zscaler, Inc. engages in the provision of a cloud-based internet security platform. It offers Zero Trust Exchange, Zscaler Client Connector, Zscaler Internet Access, Zscaler Private Access, Zscaler B2B, Zscaler Cloud Protection, and Zscaler Digital Experience. The company was founded by Jagtar Singh Chaudhry and K. Kailash in September 2007 and is headquartered in San Jose, CA.
Predefined Scans Triggered: Elder Bar Turned Blue, New 52-week Highs, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
ZS is down -0.03% in after hours trading. It broke from an intermediate-term trading range. It does appear it may want to move lower one more day toward the breakout point given the bearish engulfing candlestick. It would offer a better entry. The RSI is positive and not overbought. The PMO is rising on a Crossover BUY Signal. The OBV is rising an confirming the rally. Stochastics are above 80. I particularly like the relative strength for the industry group and ZS itself. This is a leader in this industry group. The stop is set beneath the 20-day EMA at 6.7% or $159.21.
The weekly chart looks fantastic and does suggest this one could be held in the intermediate term. We can see how significant this breakout is on the weekly chart. It is a strong area of new support given the price "touches" on that support/resistance line. The weekly PMO is surging above the signal line and the weekly RSI is in positive territory and not overbought. The cherry on top is the incredibly high SCTR value. Optimistically I see upside potential at over 34%.
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 50% long, 2% 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.
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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.
Helpful DecisionPoint Links:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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