It wasn't a great week for "Diamonds in Rough" which was disappointing coming off such a successful last week. I think I should discuss the Sparkle Factor indicator in more detail.
First, the Sparkle Factor is my opinion on how the "Diamond in the Rough" will fare moving forward. I have three choices: Bullish, Bearish and Neutral. This week I have three Neutral Sparkle Factors.
A bullish Sparkle Factor means I believe the stock still has short-term promise. Most of the time I'll list a green Sparkle Factor as positions have not been on the radar long.
A bearish Sparkle Factor means I don't like the stock. If you own it you may want to consider unloading it or tightening the stop.
A neutral Sparkle Factor means that the stock doesn't look particularly bullish, but it isn't that bearish. Basically consider it a "hold" with a tightened stop.
Remember that I only update the Sparkle Factor once, at the end of the week they were picked. I don't go through and update them.
Today's neutral positions were close to being bearish, but ultimately rising trends were still intact so I couldn't go all the way bearish on them in my opinion.
Yesterday's reader requests didn't fare well today on the market's decline. However, the PMO and RSI on the charts did not break down. Consequently, they continue to hold a bullish Sparkle Factor.
The "Sector to Watch" this week is Healthcare, but I have to say that Consumer Staples looked bullish as well. I just liked the breakout on Healthcare more than the rising trend on Consumer Staples.
Of the industry groups within Healthcare, I liked Pharmaceuticals best.
I made time to run a scan at the end of the show. It didn't produce much but these two symbols looked interesting, CCSI and WU. I ran the Momentum Sleepers scan next and had only one result, LLY which happens to be a Pharmaceutical in the Industry Group to Watch.
Have a great weekend and especially have a Happy New Year! I'll see you next year!
Good Luck & Good Trading,
Erin
RECORDING & DOWNLOAD LINK (12/29/2023):
Topic: DecisionPoint Diamond Mine (12/29/2023) LIVE Trading Room
Recording & Download Link HERE
Passcode: December#29
REGISTRATION for 12/29/2023:
When: Jan 5, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (1/5/2024) LIVE Trading Room
Register in advance for this webinar HERE.
After registering, you will receive a confirmation email containing information about joining the webinar.
Our latest DecisionPoint Trading Room recording (12/18, no recordings for 12/25 or 1/1):
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:
Shenandoah Telecommunications Co. (SHEN)
EARNINGS: 02/21/2024 (BMO)
Shenandoah Telecommunications Co. is a holding company, which engages in the provision of regulated and unregulated telecommunication services to end-user customers and other telecommunications providers. It offers voice, video and data communications services. It operates through the Broadband and Tower segments. The Broadband segment provides broadband, video, and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, and Kentucky, via fiber optic and hybrid fiber coaxial ("HFC") cable. The Tower segment leases space on 225 owned cell towers. The company was founded in 1902 and is headquartered in Edinburg, VA.
Predefined Scans Triggered: Elder Bar Turned Green.
Below are the commentary and chart from Tuesday, 12/26:
"SHEN is unchanged in after hours trading. The is chart is in the early stages and offers us an opportunity to get in while this one isn't overbought. It has reversed nicely off support and has now overcome both the 20/200-day EMAs. The PMO is rising toward a Crossover BUY Signal. While this reversal is occurring beneath the zero line, this looks like developing strength not diminishing weakness. Stochastics are now above 50. Relative strength is about even with the SPY for the group, but SHEN is outperforming both the group and the SPY. I've set the stop beneath support at 7.4% or $19.85."
Here is today's chart:
This is far from an explosive chart, but it is doing what we want it to do and that is continue to rally and hold support. Stochastics are now above 80 and the RSI is now in positive territory. The chart is ripening.
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:
3D Systems Corp. (DDD)
EARNINGS: 02/27/2024 (AMC)
3D Systems Corp. is a holding company, which engages in the provision of comprehensive three-dimensional printing solutions. It offers a comprehensive range of 3D printers, materials, software, haptic design tools, 3D scanners, and virtual surgical simulators. The company was founded by Charles W. Hull in 1986 and is headquartered in Rock Hill, SC.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band and P&F Low Pole.
Below are the commentary and chart from Tuesday, 12/26:
"DDD is up +0.44% in after hours trading. I see this as a 'boom or bust' stock. It has some great upside potential, but it carries volatility risk. It is also low priced and that contributes to volatility. Position size wisely if you get involved in this one. There is bull flag that was confirmed with today's strong rally. The weekly RSI is positive and not quite overbought. The PMO surged above its signal line today. The industry group isn't doing great, but DDD is outperforming the SPY steadily so we will ignore that for now. Stochastics have turned up in positive territory. The stop was tough to set given today's big move. I opted for a 7.7% stop around $6.26."
Here is today's chart:
The rising trend is still intact, but the PMO looks especially bearish on this top. Price should've rallied more out of the bull flag and since it is not, I am putting this position in the neutral category. The rising trend being intact prevents this from being a straight up bearish Sparkle Factor.
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: Healthcare (XLV)
XLV was last week's Sector to Watch and it deserves to be this week's as well. While many of the other sectors show topping PMOs, XLV's is rising. The RSI is positive and not overbought. Participation is very robust (maybe a little too much as it means it is overbought) and could fuel the sector higher. Stochastics are above 80 and relative strength is improving. This is also considered a defensive area of the market, something that could serve us well should the market begin to decline next week.
Industry Group to Watch: Pharmaceuticals (XPH)
I pulled the Pharmaceuticals ETF (XPH) rather than industry group chart. This can be traded. Price has hit overhead resistance so the moment of truth has arrived. Currently it is pulling back from this level somewhat which makes it an interesting entry. The RSI is admittedly overbought, but it has maintained this condition for a few weeks. It could continue to. The PMO is rising strongly and isn't that overbought given the lower end of the range is -4.0. Stochastics are oscillating above 80 denoting internal strength. Relative strength is excellent for the group. This is overbought, no doubt, but I still see some short-term upside left to go. Some symbols that we found in today's Diamond Mine trading room were SCPH, HCM, VNDA and LLY (which also came through on the Momentum Sleepers scan I ran at the end of the program).
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 75% long, 0% 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)
(c) Copyright 2023 DecisionPoint.com