"Diamonds in the Rough" averaged higher on the week, but we did see six out of ten in the red to finish the week. The outlook is good for all but one position so better entries should be available now on most of them.
This week's "Darling" was Beazer Homes (BZH) which was up 6.87% since being picked on Tuesday. The "Dud" this week is National Beverage Corp (FIZZ) which finished down -4.90% since Tuesday. I had thought that with the market acting soft that Consumer Staples would be a good place to look for stocks, but instead the sector as a whole began to underperform. I don't like FIZZ moving forward.
I struggled with what our Sector to Watch should be between Materials (XLB) and Communication Services (XLC). I've decided to go with XLC with the Industry Group to Watch being Internet. This would be your Googles of the world. I didn't use Media Agencies as the Group to Watch, but I did find a few symbols of interest: QNST and CCO.
I had time to run a Diamond Scan this morning. I turned up three symbols that you may want to take a look at: AMCR, HPQ and DUST.
Have a great weekend!
Good Luck & Good Trading,
Erin
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Our latest DecisionPoint Trading Room recording (12/4):
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:
Beazer Homes USA, Inc. (BZH)
EARNINGS: 02/01/2024 (AMC)
Beazer Homes USA, Inc. engages in the design and sale of single-family and multi-family homes. It operates through the following geographical segments: West, East, and Southeast. The West segment includes Arizona, California, Nevada, and Texas. The East segment consists of Delaware, Indiana, Maryland, Tennessee, and Virginia. The Southeast segment focuses on the Florida, Georgia, North Carolina, and South Carolina. The company was founded in 1985 and is headquartered in Atlanta, GA.
Predefined Scans Triggered: Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
Below are the commentary and chart from Tuesday, 12/5:
"BZH is unchanged in after hours trading. This one caught my eye due to the cup shaped bottom that recently formed on support. After a breakout and then a deep correction, it is recovering. The RSI is positive and the PMO is nearing a Crossover BUY Signal. Stochastics are rising strongly. The group has been on a tear since the October low, outperforming the SPY in a big way. BZH is showing leadership among the group members and is outperforming the SPY. The stop is set at 6.5% below the 50-day EMA or $26.14."
Here is today's chart:
BZH has not stopped rallying and it looks ready to breakout out at the next level of resistance. It may be a little late for entry here, but given the very bullish indicators, it should still have higher to go...probably to overhead resistance at the August top. I like that the PMO is only now giving us a Crossover BUY Signal and it isn't overbought. This one should keep on going.
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:
National Beverage Corp. (FIZZ)
EARNINGS: 12/07/2023 (AMC) ** Reports Thursday **
National Beverage Corp. engages in the development, manufacture, market, and sale of sparkling waters, juices, energy drinks, and carbonated soft drinks. Its brands include LaCroix, LaCroix Crate, LaCroix NiCola, Clear Fruit, Rip It, Everfresh, Everfresh Premier Varietals, Mr. Pure, Shasta, and Faygo. The company was founded by Nick A. Caporella in 1985 and is headquartered in Fort Lauderdale, FL.
Predefined Scans Triggered: Three White Soldiers and Parabolic SAR Buy Signals.
Below are the commentary and chart from Tuesday, 12/5:
"FIZZ is up +0.35% in after hours trading. We have a not so well-known candlestick pattern, Three White Soldiers. This is a bullish reversal pattern that suggests more upside ahead. Price also broke from a bullish falling wedge pattern. The RSI is positive and not overbought. The PMO just triggered a Crossover BUY Signal. There is a positive divergence between OBV bottoms and price lows. Stochastics are rising strongly and relative strength is building. This is a defensive stock that should hold up through more market pause. The stop is set below support at 5.4% or $46.33."
Here is today's chart:
This one caught me by surprise. The set up was so bullish. The only thing that could be considered a possible clue that it wouldn't perform is the flat PMO. The other problem is that it reported earnings yesterday and apparently they were not well received. I try to avoid stocks getting ready to report, but this chart just looked so enticing.
THIS WEEK's Performance:
DecisionPoint Market Scoreboard (Mechanical Trend Model Signals):
Friday's signal changes are outlined in purple.
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Communication Services (XLC)
I like the reversal off the 50-day EMA. The PMO is attempting to turn back up. The RSI barely got negative and it is back into positive territory. Both the Golden Cross Index (GCI) and Silver Cross Index (SCI) are riding above their signal lines so we have a bullish bias in the intermediate and long terms. Participation is seeing some improvement, but mainly the decline didn't take out too many stocks so we have internal strength. Stochastics have popped higher and relative strength has bumped up.
Industry Group to Watch: Internet ($DJUSNS)
Not surprisingly, Google (GOOGL) has a very similar chart. It appears it is ready to reverse and test overhead resistance. What attracted me to this group was the nearing PMO BUY Signal, positive RSI and rising Stochastics. We should see some follow-through on this recent rally. If the market does finally decided to pullback, I'd be careful here. The symbols I found for this group are: HEPS and MAX.
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 65% long, 2% 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."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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