It was a decent week for "Diamonds in the Rough". They did manage to outperform the SPY on the week, but unfortunately were lower on average.
Shorts are definitely serving us well with this week's "Darling" being the short position on MCBC Holdings (MCFT). Boston Beer (SAM) was down over 12% today so the stop was hit. It reported earnings and slid heavily. I do try to avoid stocks that are getting ready to report for this reason. I should've known better.
The market is still exceptionally weak so I would concentrate on shorts and hedges going into next week. But if you want something on the long side, Materials (XLB) looks interesting as participation is beginning to broaden while price consolidates. Steel in particular looked very positive.
We had time to look for some shorting opportunities in the Diamond Mine trading room. I ran my Diamond Dog Scan and found four stocks that have bleak outlooks technically: CARG, SHOO, LAND and XYL.
Have a great weekend!
Good Luck & Good Trading,
Erin
RECORDING LINK (10/27/2023):
Topic: DecisionPoint Diamond Mine (10/20/2023) LIVE Trading Room
Passcode: October#27
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When: Nov 3, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (11-3-2023) LIVE Trading Room
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Our latest DecisionPoint Trading Room recording (10/23):
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:
MCBC Holdings, Inc. (MCFT)
EARNINGS: 11/08/2023 (BMO)
Mastercraft Boat Holdings, Inc. engages in the designing, manufacturing, and selling of boats. It operates through the following segments: MasterCraft, Crest, NauticStar, and Aviara. The MasterCraft segment offers recreational performance boats used for water skiing, wakeboarding, and wake surfing activities and general recreational boating under product brands, such as MasterCraft. The Crest segment produces pontoon boats at its Owosso, Michigan facility, which are used for general recreational boating. The NauticStar segment produces boats at its Amory, Mississippi facility, which are used for saltwater fishing and general recreational boating. The Aviara segment consists of the Aviara brand which manufactures luxury day boats. The company was founded in 1968 and is headquartered in Vonore, TN.
Predefined Scans Triggered: New CCI Sell Signals and Parabolic SAR Sell Signals.
Below are the commentary and chart from 10/24:
"MCFT is unchanged in after hours trading. Price topped at overhead gap resistance. The RSI is in negative territory and the PMO has topped well below the zero line. The OBV is in a declining trend. Stochastics are falling after once again failing to get above 80. Relative strength for the group is failing so even though MCFT is a leader against the group, it isn't translating in much outperformance against the SPY which is good for a short. The upside stop is set at 7.7% or $23.15."
Here is today's chart:
This turned out to be a really good short as it continues to make its way down toward support. There is a new PMO Crossover SELL Signal and the RSI is very negative. Be prepared for a possible bounce should it reach support. That might be a good time to exit the position.
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:
Boston Beer Co. Cl A (SAM)
EARNINGS: 10/26/2023 (AMC) ** Reports on Thursday **
Boston Beer Co., Inc. engages in the production of alcoholic beverages. Its brands include Truly Hard Seltzer, Twisted Tea, Samuel Adams, Angry Orchard, Hard Cider and Dogfish Head Craft Brewery. Boston Beer produces alcohol beverages, including hard seltzer, malt beverages ("beers"), and hard cider at company-owned breweries and its cidery, and under contract arrangements at other brewery locations. The company was founded by C. James Koch in 1984 and is headquartered in Boston, MA.
Predefined Scans Triggered: Filled Black Candles and P&F Double Top Breakout.
Below are the commentary and chart from 10/24:
"SAM is unchanged in after hours trading. It is currently up against resistance and today we did see a bearish filled black candlestick. I picked the chart based on the nearing PMO BUY Signal and positive RSI. It is also in the Consumer Staples sector which I do favor right now. The RSI is positive and gently rising. Stochastics are rising and should move above 80 tomorrow barring a big decline. Relative strength is excellent suggesting we should see more outperformance from SAM. The stop is set at the 200-day EMA at 6.4% or $351.78."
Here is today's chart:
Where did this one go wrong? I should not have picked a stock so close to reporting earnings, but that filled black candlestick did warn that the rally may stall at overhead resistance. It has now reached gap support, but given the velocity of this decline, I would look for it to breakdown there. Support at 300 would then be available. I think this stock might be a good short, but let's face it, it has already experienced so much decline, downside potential might be limited.
THIS WEEK's Performance:
DecisionPoint Market Scoreboard (Mechanical Trend Model Signals):
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Materials (XLB)
The PMO has not started rising again so this is still watch list material more than investment material. I do like that the decline paused on strong support. The PMO is decelerating and could turn up next week. Participation was the primary reason I chose XLB. Notice that %Stocks > 20/50EMAs are rising. These percentages are still well below our 50% bullish threshold, but this suggests there are more stocks that could participate in a rally. Stochastics are still negative as well so this chart does need some ripening.
Industry Group to Watch: Steel ($DJUSST)
I liked the "V" Bottom pattern. The pattern suggests that price will overcome the left side of the "V". That implies a breakout above 550. The RSI is negative but rising. The PMO is rising toward a Crossover BUY Signal. Stochastics are rising. Once we decided Steel was the group to watch, we picked out three symbols to consider: X, CLF and ASTL.
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, 15% 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."
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DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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