The market is looking good in the short term, but past that we'd be very careful. All of today's selections should do well if the market continues to rally, but I suspect these investments will only hold for the short term, not the intermediate or long terms. If I'm incorrect and the market does continue to rally longer, they will serve you well.
The scans overall didn't produce much except the PMO Crossover BUY Signal Scan. One issue with ETFs is that are so many of them that do the same thing. I will always try to bring you lesser known ETFs, but you can of course go with the SPY. Some of these have different strategies so do use the link to review them.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EWJ, IMTM and PDO.
Runners-up: DVYE, PFFD, VPL and HEWJ.
RECORDING LINK (10/27/2023):
Topic: DecisionPoint Diamond Mine (10/27/2023) 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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Here is the last recording from 10/30:
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.
iShares MSCI Japan ETF (EWJ)
EARNINGS: N/A
EWJ tracks a market-cap-weighted index which covers roughly 85% of the investable universe of securities traded in Japan. Click HERE for more information.
Predefined Scans Triggered: P&F Double Bottom Breakdown, P&F Descending Triple Bottom Breakdown and Parabolic SAR Buy Signals.
EWJ is down -0.02% in after hours trading. There is a bullish double bottom forming and price has broken the declining trend. The RSI has just moved into positive territory and there is a brand new PMO Crossover BUY Signal. Stochastics are rising in positive territory. This has been a strong relative performer of late. I also noted a slight OBV positive divergence. You can set the stop below support at 5% or $56.97.
The weekly chart is improving, it isn't quite ripe. The weekly RSI is rising but is still below net neutral (50). The weekly PMO has decelerated, but is still technically in decline. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70. I note that price is bouncing right off the 2019 top. I've marked upside potential after a breakout to be around 13.5% should it reach resistance at $67.50.
*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.
iShares MSCI Int'l Developed Momentum Factor ETF (IMTM)
EARNINGS: N/A
IMTM tracks an index of large- and mid-cap stocks from developed countries, ex-US. The momentum-selected stocks are weighted by market cap and momentum. Click HERE for more information.
Predefined Scans Triggered: Bullish MACD Crossovers, Parabolic SAR Buy Signals and P&F Low Pole.
IMTM is down -0.51% in after hours trading. There is a bullish double bottom developing. There is a very strong OBV positive divergence. The RSI just entered positive territory and the PMO has a new Crossover BUY Signal. Stochastics are rising strongly. We can also see that it is outperforming the SPY. The stop can be set thinly at 3.6% or $30.19. I don't think this is volatile enough to hit that stop immediately, but you could choose to make it deeper.
The weekly chart is not favorable so this is definitely a short-term timeframe trade. We have to count on a breakout to get to the 20% upside potential. If the rally I expect is short-term in nature, this one will have limited upside potential as the first line of resistance would likely hold. The weekly PMO is about to drop below the zero line and the SCTR, while improving, is still outside the hot zone.
PIMCO Dynamic Income Opportunities Fund (PDO)
EARNINGS: N/A
The fund utilizes an opportunistic approach to pursue high conviction income-generating ideas across credit markets to seek current income as a primary objective and capital appreciation as a secondary objective. Click HERE for more information.
Predefined Scans Triggered: Elder Bar turned Green.
PDO is up +2.19% in after hours trading. This one had a fantastic day so I would expect a pullback tomorrow. However, after hours trading suggests it will continue to move upward. The RSI is now in positive territory and the PMO has had a Crossover BUY Signal. Stochastics are below net neutral (50) but are rising vertically. We should see follow through. Relative strength is rising against the SPY. Consider a 6.7% stop around $10.63.
This fund hasn't been around that long, but price is bouncing off all-time lows. The weekly RSI is negative, but rising. The weekly PMO is decelerating but falling. The SCTR is outside the hot zone, but is rising quickly. Keep this one in the short-term timeframe, but it does have some nice upside potential if it can keep its rally moving forward.
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 20% long, 10% 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.
"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