Yesterday I had a number of Energy related stocks come to the forefront in my scan results. Given my lukewarm opinion on Crude Oil, I am surprised the theme has taken hold.
Today when I ran ETF scans, a huge number of Crude Oil related ETFs appeared. I saw a few stocks in this area as well. Still, I'm not interested in going all in on this theme. I presented Chevron (CVX) yesterday and today to cover Energy, I added an Energy related ETF. Past that, I would be careful. Something is going on here given new PMO BUY Signals arriving on Energy related stocks and ETFs. Price patterns and charts are still underwhelming. But, as I said, I did include one today.
The majority of scan results were unimpressive. I really had to search to find five I liked and I'm still not entirely happy with the results. Hence, be careful with these "Diamonds in the Rough". The market is due for a decline anyway so adding to portfolios carries a bit more risk than usual.
There will be no DP Diamonds Recap nor a Diamond Mine trading room on Friday due to the holiday. We will be publishing the DP Weekly Wrap on Friday for DP Alert subscribers.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CBOE, DGX, IYE, NWSA and PGTI.
Runner-ups: FTGC, UGL, HES and NKE.
RECORDING LINK (11/17/2023):
Topic: DecisionPoint Diamond Mine (11/17/2023) LIVE Trading Room
Passcode: November#17
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When: Dec 1, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/1/2023) LIVE Trading Room
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Here is the last recording from 11/13 (no recording for 11/20):
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.
CBOE Global Markets Inc. (CBOE)
EARNINGS: 02/02/2024 (BMO)
Cboe Global Markets, Inc. engages in the provision of trading and investment solutions to investors. It operates through the following business segments: Options, North American Equities, Futures, Europe and Asia Pacific, Global FX, and Digital. The Options segment includes the options exchange business, which lists trading options on market indexes (index options), as well as on non-exclusive multiply listed options. The North American Equities segment covers listed cash equities and ETP transaction services that occur on BZX, BYX, EDGX, and EDGA. The Futures segment is composed of the business of futures exchange, CFE, which includes offering for trading futures on the VIX Index and bitcoin and other futures products. The Europe and Asia Pacific segment relates to the pan-European listed cash equities transaction services, ETPs, exchange-traded commodities, and international depository receipts that occur on the RIE, operated by Cboe Europe Equities. The Global FX segment represents the institutional FX trading services that occur on the Cboe FX platform. The Digital segment refers to Cboe Digital, which operates a digital asset spot market and a regulated futures exchange. The company was founded in 1973 and is headquartered in Chicago, IL.
Predefined Scans Triggered: Elder Bar Turned Green, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout, P&F Double Top Breakout and Hanging Man.
CBOE is up +0.11% in after hours trading. Today it broke out after forming a bearish shooting star candlestick. Technically today's "hanging man" candlestick is also bearish so it may take a little bit of churn before it resumes the rally. It isn't a perfect chart as we can see the RSI is overbought. This is another sign it could decline before rallying again. Still, CBOE has been able to hold overbought conditions for some time based on history. The PMO surged today above the signal line which is what brought it to my attention. Relative strength for the group is improving and Stochastics are above 80 and rising. This one tends to hold a leadership role within the group so we should see more outperformance. The stop is set at 7% or $167.45.
The weekly chart is very favorable with the exception of an overbought weekly RSI. It has maintained this condition for some time so we could see more upside in spite of being overbought. The weekly PMO is very bullish and the StockCharts Technical Rank (SCTR) is at the top of the hot zone* above 70. Consider a 17% upside target to $210.67.
*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.
Quest Diagnostics Inc. (DGX)
EARNINGS: 02/01/2024 (BMO)
Quest Diagnostics, Inc. engages in the provision of diagnostic testing, information and services. It operates through the Diagnostic Information Services (DIS) and All Other segments. The DIS segment offers diagnostic information services to patients, clinicians, hospitals, health plans, and employers. The All Other segment consists of risk assessment services, healthcare information technology, diagnostic products, and clinical trials testing businesses. The company was founded in 1967 and is headquartered in Secaucus, NJ.
Predefined Scans Triggered: New CCI Buy Signals and P&F Low Pole.
DGX is unchanged in after hours trading. This is another result from my Surge Scan. The PMO is overbought right now, but this 'surge' suggests we have more upside to go. It has spent some time consolidating this last week hopefully in preparation for another leg up toward overhead resistance. The RSI is positive and not overbought. Stochastics are almost back above 80 and are rising. The group hasn't been doing that well, but it appears it might be ready to outperform again. One big negative is that DGX has been underperforming the SPY. This is likely due to the poor group performance as it typically does better than the group. If group performance improves as it appears ready to do, we should see accompanying outperformance by DGX against the SPY. The stop is set below support at 6% or $127.60.
I like the look of the weekly chart, it suggests more upside ahead. Price bounced off strong support and is headed back to the top of its trading range. The weekly RSI is positive and the weekly PMO is on a Crossover BUY Signal. I'm not happy with the SCTR which is in decline. Keep this short-term.
iShares U.S. Energy ETF (IYE)
EARNINGS: N/A
IYE tracks a market-cap-weighted index of large-cap US companies in the energy industry. Click HERE for more information.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Stocks in a New Downtrend (ADX), Elder Bar Turned Blue and Hollow Red Candles.
IYE is down -0.34% in after hours trading. This is not a chart I would normally present. I'm mainly presenting it as the theme in my scans has been all about Energy so I figured we should go with an Energy ETF. Price is holding support and appears to be forming a bullish triple bottom. Today's big hollow red candlestick is actually bullish and suggests a rally tomorrow (although after hours trading isn't translating this right now). The RSI is still negative, but we are about to see a PMO Crossover BUY Signal. Stochastics are mostly rising, but did top today. This ETF is now performing in line with the SPY. You can set an even tighter stop than mine if you want to alleviate some risk. I've set it below support at 5.3% or $42.11.
The weekly chart doesn't inspire confidence as the declining trend out of the last October top is still intact. The weekly RSI is negative and the weekly PMO is flat on a Crossover SELL Signal. The SCTR is in the basement. Keep this one short-term.
News Corp. (NWSA)
EARNINGS: 02/08/2024 (AMC)
News Corp. is diversified media and information services company, which engages in the business of creating and distributing authoritative and engaging content and other products and services to consumers and businesses. It operates through the following segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other. The Digital Real Estate Services segment is involved in the operations of the REA Group. The Subscription Video Services segment provides sports, entertainment, and news services to pay-TV and streaming subscribers and other commercial licensees. The Dow Jones segment offers content and data through a variety of owned and off-platform media channels including newspapers, newswires, websites, mobile apps, newsletters, magazines, proprietary databases, live journalism, video, and podcasts. The Book Publishing segment focuses on HarperCollins which publishes and distributes consumer books globally through print, digital, and audio formats. The News Media segment includes the operations of News Corp Australia, News UK, and the New York Post. The Other segment consists of corporate overhead expenses, strategy costs, and costs related to the newspaper matters. The company was founded by Keith Rupert Murdoch in 1979 and is headquartered in New York, NY.
Predefined Scans Triggered: New CCI Buy Signals, Ichimoku Cloud Turned Green, Parabolic SAR Buy Signals and P&F Double Top Breakout.
NWSA is unchanged in after hours trading. I like the upside breakout from the symmetrical triangle formation. These are continuation patterns and given the prior trend was up, we should expect the breakout to continue. The RSI is positive, rising and not overbought. The PMO is on a new Crossover BUY Signal. Stochastics are rising nicely toward 80. Relative strength is picking up for the group which is good for NWSA given it travels in line with its group. NWSA is outperforming the SPY right now. The stop is set at support at 7.9% or $20.21.
I like the breakout on the weekly chart. It still hasn't seen much follow-through since the original breakout, but it should soon based on the weekly PMO Crossover BUY Signal and positive weekly RSI. Bonus is a SCTR in the hot zone.
PGT, Inc. (PGTI)
EARNINGS: 02/21/2024 (BMO)
PGT Innovations, Inc. engages in the manufacture and supply of windows and doors under the brand names PGT Custom Windows + Doors, CGI, WinDoor, Western Window Systems, Eze-Breeze, and CGI Commercial. It operates through the Southeast and Western geographical segments. The company was founded by Rodney Hershberger in 1980 and is headquartered in Nokomis, FL.
Predefined Scans Triggered: Elder Bar Turned Green and P&F Double Top Breakout.
PGTI is up +0.87% in after hours trading. After gapping up price has been essentially moving sideways chopping around. It is due for a breakout. The RSI is positive and the PMO has surged above the signal line. The OBV is confirming the rise out of the October low. Stochastics are back above 80. The group has performed very well, but is beginning to cool a bit. Overall, PTGI is slightly outperforming. The stop is set at the 50-day EMA at 6.7% or $30.04.
I very much like the weekly chart so this one could be considered an intermediate-term investment rather than a short-term trade. The weekly RSI is positive, rising and not overbought. The weekly PMO is rising on a Crossover BUY Signal and is not overbought either. The SCTR is at the top of the hot zone. Consider a 17% upside target near $37.67.
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.
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