The Diamond Scans didn't really produce much today as far as ETFs, but I did find a scan I haven't used in some time that did give me some interesting results. The scan identifies ETFs with rising PMOs primarily with a little secret sauce added to scale down the results.
I would consider all three of today's ETFs for my own portfolio. They are on my watch list for now as I do think we will see a digestion phase begin. If you add to your portfolio, set stops for protection. It's a habit to get into after a purchase to just go in and set the stop right then. Stay protected!
Good Luck & Good Trading,
Today's "Diamonds in the Rough": CIBR, LIT and WCLD.
Runners-up: SIL, SLV, EUFN and YINN.
RECORDING LINK (11/10/2023):
Topic: DecisionPoint Diamond Mine (11/10/2023) LIVE Trading Room
REGISTRATION for 11/17/2023:
When: Nov 17, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (11/17/2023) LIVE Trading Room
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Here is the last recording from 11/13:
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.
First Trust NASDAQ Cybersecurity ETF (CIBR)
CIBR tracks a liquidity-weighted index that targets companies engaged in the cybersecurity industry. Click HERE for more information.
Predefined Scans Triggered: New 52-week Highs, Stocks in a New Uptrend (ADX), P&F Double Top Breakout and P&F Triple Top Breakout.
CIBR is down -1.16% in after hours trading so a better entry should be available ahead. Price broke out convincingly with a breakaway gap. Price did decline today but stayed comfortably above new support. The RSI is positive and not yet overbought. The PMO is rising strongly and volume is confirming the rally and the breakout. Today's action looks like some profit taking on high volume. Stochastics are above 80 and it is showing terrific relative strength. I've set the stop at the 200-day EMA around 7.9% or $44.28.
This was a significant breakout on the weekly chart and sets the stage for a nice rally to all-time highs. The weekly RSI is positive, rising and not overbought. The weekly PMO is in the process of triggering a Crossover BUY Signal. The SCTR has been taking up residence in the hot zone* above 70 for months. This could be an intermediate-term investment.
*If a stock 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.
Global X Lithium ETF (LIT)
LIT tracks a market-cap-weighted index of global lithium miners and battery producers. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, Parabolic SAR Buy Signals and P&F Double Top Breakout.
LIT is up +1.18% in after hours trading. This is a riskier reversal candidate. It is a great setup given the formation of the bullish double bottom. The pattern won't be confirmed until we have a breakout above the confirmation line, but given the way indicators are maturing, I would expect it will occur soon. The RSI just moved into positive territory and the PMO is rising after surging earlier this month. OBV bottoms are rising while price lows are flat; that is a positive divergence. Stochastics are rising in positive territory. Given its long-term decline, it has been clearly underperforming the market; however, I believe this is the turning point. The stop is set beneath support at 7.1% or $46.54.
The weekly chart is clearly negative based on the recent decline. Price does seem to be reversing before needing to test support which is bullish, but it also leaves us open to downside risk as it is reversing out in space. The weekly RSI is negative and the weekly PMO is in decline on a Crossover SELL Signal. The SCTR is in the basement. Keep this one short-term until we see if this bottom will hold.
WisdomTree Cloud Computing Fund (WCLD)
WCLD tracks and index of US companies primarily focused on cloud software and services. Stocks are equal weighted in the index. Click HERE for more information.
Predefined Scans Triggered: None.
WCLD is up +0.59% in after hours trading. I see a messy reverse head and shoulders pattern that is bullish. The neckline is declining so the pattern was confirmed on yesterday's breakaway gap. Today price broke out intraday, but closed right on overhead resistance. The indicators are already ripe with a positive and not overbought RSI, a rising PMO on a Crossover BUY Signal and Stochastics already above 80. We're even seeing improved relative performance. The stop is set beneath support at 7.1% or $28.16.
Similar to LIT, price has reversed just above support. The weekly RSI just entered positive territory and the weekly PMO just turned back up. The SCTR is almost in the hot zone above 70. There is plenty of upside potential should it breakout, but even if it doesn't, a 17% gain would be very good at resistance.
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 70% long, 0% short. All three ETFs are 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
(c) Copyright 2023 DecisionPoint.com
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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