The SEC approved a rules change that will now afford investment firms the opportunity to sell Bitcoin based ETFs. Apparently they are ready to trade starting tomorrow. As part of this approval, it is likely that the Grayscale Bitcoin Trust (GBTC) will convert to an ETF trading vehicle.
This is sure to continue the goosing of Bitcoin prices and so when I saw the GBTC chart and its bullish features, I decided it was time to include it as a "Diamond in the Rough". I'm not a huge fan of crypto, but I do like the idea of investing via an ETF. I'm not alone which is why the street is expecting a glut of new investors. We shall see. The chart was worth a look regardless.
The other two ETFs look pretty good, but the market is still telling me to be cautious. I opted not to add to my portfolio this week. It may be best to manage what you already have rather than expand further, but I know my Diamonds subscribers have a healthy risk appetite and tight trading horizon so I'm always happy to supply more opportunities.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GBTC, HACK and IHI.
Runner-ups: XLC, MTUM, URNM, YANG, PFIX, URA and KIE.
RECORDING & DOWNLOAD LINK (1/5/2024):
Topic: DecisionPoint Diamond Mine (1/5/2024) LIVE Trading Room
Recording and download link HERE.
Passcode: January#5
REGISTRATION for 1/12/2024:
When: Jan 12, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (1/12/2024) LIVE Trading Room
Register in advance for this webinar HERE.
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Here is the recording link for 1/5 (not posted to YouTube this week, link expires in two weeks):
Passcode: January#8
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.
Grayscale Bitcoin Trust (GBTC)
EARNINGS: N/A
Grayscale Bitcoin Trust is one of the first securities solely and passively invested in Bitcoin ("BTC") that enables investors to gain exposure to BTC in the form of a security while avoiding the challenges of buying, storing, and safekeeping BTC, directly. Shares (based on BTC per Share) are designed to reflect the value of BTC held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities. Bitcoin is a digital asset that is created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols. The Bitcoin Network allows people to exchange tokens of value, Bitcoins, which are recorded on a public transaction ledger known as a Blockchain.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
GBTC is down -0.06% in after hours trading. Bitcoin has been on a steady rising trend since the rumors began regarding new ETFs. In the wake of the SEC decision, volume has been soaring. The RSI is positive and not yet overbought. Overbought conditions on the RSI haven't been a big problem, just look at October/November. The PMO is nearing a Crossover BUY Signal. Stochastics just turned up while above 80. GBTC has been outperforming since October. The stop is set as deeply as I generally go due to likely volatility. The stop is 7.9% or $37.30.
I don't think that it is out of the question that Bitcoin will recapture its all-time high plus some. The weekly RSI is very overbought so a pullback is warranted. Ultimately we should see price continue rising based on the very positive and not overbought weekly PMO.
PureFunds ISE Cyber Security ETF (HACK)
EARNINGS: N/A
HACK tracks a tiered, equal-weighted index that targets companies actively involved in providing cybersecurity technology and services. Click HERE for more information.
Predefined Scans Triggered: Improving Chaikin Money Flow, New CCI Buy Signals, 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 Strong Volume Gainers.
HACK is up +1.03% in after hours trading. Price saw a strong breakout today and it is accompanied by strong indicators. This could be a flag formation out of the October low. The breakout from the formation implies much more upside. I'm still not excited about the future of the market right now, but I can't argue with this bullish chart. The RSI is positive and rising. The PMO has turned around and is now rising. Stochastics are moving vertically higher. Notice the big volume arriving in this ETF on this rally. We should see some follow-through. The stop is set below support at 5.5% or $57.93.
The weekly RSI is overbought by a bit, but it could remain that way for a few more weeks. The weekly PMO is rising strongly and best of all, it is not overbought. The StockCharts Technical Rank (SCTR) is at the very top of the hot zone above 70. I see new all-time highs ahead for this ETF. Consider a 17% upside target to around $71.73.
iShares U.S. Medical Devices ETF (IHI)
EARNINGS: N/A
IHI tracks a market-cap-weighted index of manufacturers and distributors of medical devices in the US. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band and P&F Low Pole.
IHI is up +0.90% in after hours trading. It had a good day probably due in part to ISRG which was up over 10% today. The rest of the group is obviously humming given rising relative strength and a solid rally. The RSI did just move into overbought territory, but given the rally it's seen, not a surprise. I think there is more upside ahead based on the new PMO Crossover BUY Signal. Stochastics have risen above 80 and volume is coming in on this current rally. Consider a stop level at the 200-day EMA around 7.3% or $51.44.
I would say that when price hits overhead resistance, it could experience a pullback as it has been range bound. This time I do think we will eventually get a breakout above that level. The weekly RSI is positive and the weekly PMO is now above the zero line on a Crossover BUY Signal. The SCTR has just entered the hot zone. I'm looking for a test of all-time highs.
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'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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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