I was getting discouraged as I ran my regular scans on the ETF universe as none of them were turning up many choices. Then I ran the Surge Scan and picked up 70 results. The Surge Scan, among other things, seeks out stocks with PMOs that have turned back up while above the signal line. The one problem with the Surge Scan is that it generally picks up stocks or ETFs that had a stellar day after some decline. Sometimes that means some overbought conditions.
Another issue is relative strength. If a stock or ETF has been in decline enough to move the PMO downward, relative strength will likely slip. So while the PMOs may've turned back up above the signal line, relative strength isn't always going to be there for us. I think I found some good candidates based on my analysis process despite some having relative strength issues.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EWT, GNOM and LTPZ.
Runners-up: EWY, CGXU, ECH, EEM, IDV and VXUS.
RECORDING & DOWNLOAD LINK (12/8/2023):
Topic: DecisionPoint Diamond Mine (12/8/2023) LIVE Trading Room
Passcode: December#8
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When: Dec 15, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/15/2023) LIVE Trading Room
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Here is the last recording from 12/4, no recording on 12/11:
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 Taiwan ETF (EWT)
EARNINGS: N/A
EWT tracks an index of Taiwanese firms, covering the top 85% of the market and weighted by market cap subjected to diversification requirements. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel and Parabolic SAR Buy Signals.
EWT is up +0.75% in after hours trading. Today it broke out to new 52-week highs. Given positive indicators, it should continue even higher. The RSI is positive and based on the scan, the PMO has surged above the signal line. Stochastics are rising and should get back above 80 shortly. Relative strength is a problem currently, but a continued rally should change that condition. The stop can be set thinly at 5% or $46.98.
The breakout looks especially bullish on the weekly chart as this is an area of very strong resistance that it has overcome. The weekly RSI is positive and the weekly PMO is rising on a Crossover BUY Signal. It isn't overbought. One problem is the StockCharts Technical Rank (SCTR) is outside of the hot zone* above 70. I see it moving back to all-time highs and that would mean upside potential around 17%.
*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 Genomics & Biotechnology ETF (GNOM)
EARNINGS: N/A
GNOM tracks an index of global biotech equities, selected and weighted by market cap. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel and Parabolic SAR Buy Signals.
GNOM is down -0.81% in after hours trading. Today's breakout was impressive, but it does mean we could see price drift back down toward the breakout point. That would offer an even better entry. The RSI is positive and not overbought. The PMO has surged above the signal line and it isn't overbought given the bottom of the range appears to be -4. That means the upper bound is close to +4. The PMO is currently reading at 2.71, not overbought. Stochastics have quickly reversed upward. One nice thing about this selection is that relative strength is improving. The stop is set around the 50-day EMA below support at 7.4% or $10.28.
This one could boom if it gets back above overhead resistance. There is plenty of upside potential. The weekly RSI has just moved into positive territory and the weekly PMO is rising on a Crossover BUY Signal. I'd like it to be above the zero line, but its configuration is good. The SCTR is unfortunately at the bottom of the range so keep this in the short-term timeframe until it improves.
PIMCO 15+ Year U.S. TIPS Index ETF (LTPZ)
EARNINGS: N/A
LTPZ tracks a market-value-weighted index of long-term US Treasury Inflation Protected Securities.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, Parabolic SAR Buy Signals and P&F Low Pole.
LTPZ is down -0.02% in after hours trading. This is a far from sexy investment, but given the high yield, I felt it deserved to be included. Interest rates are in a downtrend and we think that will continue, affording Bonds more rally. Today's breakout above the 200-day EMA was encouraging. The RSI is positive and not overbought. The PMO surged above its signal line. It is getting somewhat overbought, but given the surge, it likely will continue higher. Stochastics have turned up in positive territory and relative strength is actually beginning to pick up again. I've set the stop beneath the 50-day EMA around 5% or $53.11.
The weekly does show us that price is below very strong resistance right now. However, the configuration of both the weekly RSI and weekly PMO suggest a breakout ahead. The weekly RSI just moved into positive territory and the weekly PMO is rising, not overbought and on a Crossover BUY Signal. The SCTR is still a problem so keep your timeframe limited to the short term for now.
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 75% long, 0% short. I plan on purchasing GNOM.
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