The scans are producing and they continue to suggest interesting themes. I determine themes based on the aggregate scan results. I look to see what sector and industry groups are most prevalent. Today the Diamond PMO Scan was filled with Banks. I had to select one for you. I hope I picked the right one!
I noticed some action in Consumer Discretionary within the scans as well so I have one to present. Energy only saw a few results and since I still like this area, I did include one.
Finally, I saw one Biotech come through today and I was pleasantly surprised to see the relative strength line for Biotechs is beginning to rise again. I found a large-cap stock within the group that is set up well.
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Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ARMK, CFFN, ILMN and WMB.
Runner-ups: IBOC, KEY, ANDE, CAT, DNOW and KMT.
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Topic: DecisionPoint Diamond Mine (1/26/2024) LIVE Trading Room
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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.
Aramark (ARMK)
EARNINGS: 02/06/2024 (BMO)
Aramark engages in the provision of food, facilities, and uniform services. It operates through the following segments: Food and Support Services United States (FSS United States), Food and Support Services International (FSS International), and Uniform and Career Apparel (Uniform). The FSS United States segment offers food, hospitality and facility services for school districts, colleges and universities, healthcare facilities, businesses, sports, entertainment and recreational venues, conference and convention centers, national and state parks, and correctional institutions. The FSS International segment covers food, refreshment, specialized dietary, and support services, facility maintenance and housekeeping. The Uniform segment consists of the rental, sale, cleaning, maintenance, and delivery of personalized uniforms and other textile items. The company was founded in 1959 and is headquartered in Philadelphia, PA.
Predefined Scans Triggered: New CCI Buy Signals.
ARMK is up +0.21% in after hours trading. Yesterday saw a bullish engulfing candlestick and today we have a breakout from the very short-term declining trend. The breakout is what intrigued me on this chart combined with the positive indicators. The RSI is not overbought and the PMO just triggered a Crossover BUY Signal above the zero line. Stochastics are rising again in positive territory. This sector and this group haven't been performing that well, but we are seeing some positive activity as relative strength lines begin rising. It has been a great performer amongst its group. I've set the stop beneath the 200-day EMA at 6.2% or $27.42.
It has been a mostly sideways performer on the weekly chart, but it is setting itself up for a breakout. Worst case we would still see an over 12.5% gain before it heads back down again. The chart is set up well and does suggest a possible breakout ahead. The weekly RSI is positive, rising and not at all overbought. The weekly PMO is on a Crossover BUY Signal and rising gently. The StockCharts Technical Rank (SCTR) is not yet in the hot zone*, but it is moving higher and should get there soon.
*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.
Capitol Federal Financial (CFFN)
EARNINGS: 04/24/2024 (BMO)
Capitol Federal Financial, Inc. is a holding company, which operates as a community-oriented financial institution. It offers a variety of financial products and services, including checking and savings account, eBanking, trust and brokerage, and insurance. The company was founded in 1893 and is headquartered in Topeka, KS.
Predefined Scans Triggered: None.
CFFN is unchanged in after hours trading. Many Banks are already on the move higher. I wanted to pick one near or about to overcome resistance. This one did not have an overbought RSI and it was showing excellent relative strength. There is a brand new PMO Crossover BUY Signal. The RSI is positive and not overbought. Stochastics are above 80. It may still be in for a bit of pullback at resistance. We nearly have a golden cross of the 50/200-day EMAs. I set the stop below the 20-day EMA at 6.6% or $6.14.
I see a reverse head and shoulders on the weekly chart that does suggest we'll see a breakout. The weekly RSI is positive and not overbought. The SCTR is nearly in the hot zone above 70. The PMO is rising above the zero line now on a Crossover BUY Signal. I see a breakout in the future.
Illumina, Inc. (ILMN)
EARNINGS: 02/08/2024 (AMC)
Illumina, Inc. engages in the development, manufacturing, and marketing of life science tools and integrated systems for large-scale analysis of genetic variation and function. It operates through the Core Illumina segment, which serves customers in the research, clinical and applied markets fields, and enables the adoption of a variety of genomic solutions. The firm's products include instruments, kits and reagents, selection tools, and software and analysis. Its services include sequencing and microarray services, proactive instrument monitoring, and instrument services, training, and consulting. The company was founded by David R. Walt, John R. Stuelpnagel, Anthony W. Czarnik, Lawrence A. Bock, and Mark S. Chee in April 1998 and is headquartered in San Diego, CA.
Predefined Scans Triggered: Stocks in a New Uptrend (Aroon) and Moved Above Upper Price Channel.
ILMN is unchanged in after hours trading. I like the new breakout that I'm seeing above resistance. It still has some work to do to get over the 200-day EMA but at least it is on a Silver Cross BUY Signal (20-EMA above 50-EMA). There is a new PMO Crossover BUY Signal above the zero line. Stochastics are above 80 and as I mentioned in the opening, the Biotech group is beginning to outperform again. ILMN holds excellent relative strength against the group and the SPY. The stop is set beneath the 20-day EMA at 7.3% or $136.45.
The only issue with the weekly chart is the low SCTR but I suspect that will improve quickly if we get the rally I expect. The weekly RSI is now in positive territory and the weekly PMO is rising on a Crossover BUY Signal that arrived after the move out of the October low. Upside potential is over 23%.
Williams Cos., Inc. (WMB)
EARNINGS: 02/14/2024 (BMO)
The Williams Cos., Inc. operates as an energy infrastructure company, which explores, produces, transports, sells and processes natural gas and petroleum products. It operates through the following segments: Transmission and Gulf of Mexico, Northeast G&P, and West. The Transmission and Gulf of Mexico segment consists of interstate natural gas pipelines, the Transco and Northwest Pipelines, as well as natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment includes midstream gathering, processing, and fractionation businesses in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio. The West segment consists of gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, and Permian basins. The company was founded by David Williams and Miller Williams in 1908 and is headquartered in Tulsa, OK.
Predefined Scans Triggered: Parabolic SAR Buy Signals, Entered Ichimoku Cloud and Ichimoku Cloud Turned Red.
WMB is down -1.70% in after hours trading so today's bullish engulfing candlestick may not resolve with a rally as expected. Still, I like the Energy trades right now and we haven't had a Pipeline stock in some time and relatively speaking, Pipelines are starting to see some outperformance. The RSI is rising and is not overbought. There is a PMO Crossover BUY Signal (although it is beneath the zero line so not quite as exciting as it could be). Stochastics are traveling higher toward 80. This is a strong performer within the Pipelines group. The stop is set beneath the 200-day EMA at 5.7% or $33.19.
The weekly chart is okay, not great. The weekly RSI looks good in positive territory, but the weekly PMO is on a Crossover SELL Signal. It does appear to be flattening which is good. The SCTR needs to get back to the hot zone. Keep this short-term for now. Considering how bad the Energy sector was looking, WMB managed to hold up relatively well.
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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 60% 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