It's been a rough patch in the market and that starting to impinge on our scan results. Today my scans finally started to produce. There were plenty of stocks to choose from. I purposely picked two Technology stocks to take advantage of internal strength for the sector.
The other stock I chose is somewhat risky to the downside, but upside potential is high and I wanted to give those with a higher risk appetite something to chew on.
I'm expecting to see quite a few Reader Requests for Thursday so be sure to get yours in by Thursday. Enjoy the rally. I expect it to stick around longer than a week. I would still set your stops for protection should a black swan event push things the wrong way.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ANSS, INTU and RILY.
Runners-up: CCOI, EXP, CSL, IIIN, NEM, NSIT, NWSA, URI and WMS.
RECORDING LINK (10/6/2023):
Topic: DecisionPoint Diamond Mine (10/6/2023) LIVE Trading Room
Passcode: October@6
REGISTRATION for 10/13/2023:
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.
ANSYS, Inc. (ANSS)
EARNINGS: 11/01/2023 (AMC)
ANSYS, Inc. engages in the development and marketing of engineering simulation software and services. The firm's solutions include automotive, aerospace and defense, construction, energy, materials and chemical processing, autonomous engineering, and electrification. The company was founded by John A. Swanson in 1970 and is headquartered in Canonsburg, PA.
Predefined Scans Triggered: Bullish MACD Crossovers.
ANSS is unchanged in after hours trading. There is a large double bottom developing on the daily chart. The RSI just moved into positive territory and the PMO is about to give us a Crossover BUY Signal. Notice there is a positive divergence between the PMO and price lows. Stochastics are rising in positive territory. Relative strength for the Software group is rising and ANSS is seeing new relative strength against the SPY and its group. I like that I can set a stop underneath clear support at 6% or $285.08.
The weekly chart tells us to keep this one a short-term trade. The weekly RSI is negative and more importantly, the weekly PMO is in decline of an overbought Crossover SELL Signal. The StockCharts Technical Rank (SCTR) is improving, but is well outside the hot zone* above 70. If it can recapture the 2023 high, it would be a nearly 16% 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.
Intuit, Inc. (INTU)
EARNINGS: 11/28/2023 (AMC)
Intuit, Inc. engages in the provision of business and financial management solutions. It operates through the following segments: Small Business and Self-Employed, Consumer, Credit Karma, and ProTax. The Small Business and Self-Employed segment offers QuickBooks financial and business management online services and desktop software, payroll solutions, payment processing solutions, and financing for small businesses. The Consumer segment includes do-it-yourself and assisted TurboTax income tax preparation products and services. The Credit Karma segment serves consumers with a personal finance platform that provides personalized recommendations of credit cards, home, auto and personal loans, and insurance products, and online savings and checking accounts. The ProTax segment refers to the professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. The company was founded by Scott D. Cook and Thomas A. Proulx in March 1983 and is headquartered in Mountain View, CA.
Predefined Scans Triggered: P&F Double Top Breakout.
INTU is down -0.01% in after hours trading. INTU has been in a nice intermediate-term rising trend. After a mechanical pullback to the breakout point has already occurred and price is now off to the races again and it should see a breakout again. The RSI is firmly positive and the PMO is about to see a Crossover BUY Signal. Stochastics are rising and are above 80. We already talked about the strength of the Software group. INTU is seeing even better relative strength that ANSS above. The stop does have to be set a bit deeper than I would like, but other than that I really like the chart. The stop is 7.7% or $498.52.
It is coming up on strong overhead resistance when you view it on the weekly chart. Unlike ANSS, this weekly chart is very favorable. We have a positive weekly RSI and a weekly PMO Surge above the signal line. The SCTR is already in the hot zone, well within the hot zone. The OBV shows steady volume supporting the rally. If it can recapture the 2021 high, it would be an over 30% gain.
B. Riley Financial, Inc. (RILY)
EARNINGS: 11/09/2023 (AMC)
B. Riley Financial, Inc. engages in the provision of financial services and solutions to the capital raising and financial advisory needs of public and private firms. It operates through the following segments: Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer. The Capital Markets segment provides investment banking, corporate finance, research, wealth management, and sales and trading services to corporate, institutional, and high net worth clients. The Wealth Management segment offers retail brokerage, investment management, and insurance, and tax preparation services. The Financial Consulting segment focuses on a variety of specialized advisory services spanning bankruptcy, restructuring, turnaround management, forensic accounting, crisis and litigation support, appraisal and valuation, real estate, and operations management. The Auction and Liquidation segment deals with retail liquidation services. The Communications segment is composed of a portfolio of companies acquired for attractive risk-adjusted investment return characteristics. The Consumer segment includes Targus and the Brands investment portfolio. The company was founded in 1973 and is headquartered in Los Angeles, CA.
Predefined Scans Triggered: Ichimoku Cloud Turned Red.
RILY is unchanged in after hours trading. This one is barely ripe so tread carefully. The intermediate-term declining trend is still there, I prefer breakouts, but the technicals are positive. The RSI isn't above 50, but it is very near and is rising. The PMO hasn't quite given us a Crossover BUY Signal, but it is close. Stochastics are rising and are in positive territory. Relative strength is improving across the board. I also like that the 50-day EMA is above the 200-day EMA and that price has gotten back above both the 20/200-day EMAs. Setting the stop was somewhat arbitrary given there isn't a real support level nearby. I opted to set it around last month's low at 7.2% or $39.60.
Upside potential really sparked me on this one, but admittedly the weekly PMO isn't optimistic. I forgave it because the SCTR is at the top of the hot zone which implies it does have standing in the intermediate and long terms. The weekly RSI is negative, but nearly above net neutral (50). I'll feel a lot better when the declining trend is broken.
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 45% long, 2% short. I own ANSS and INTU.
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