Thank you to all those that contributed to Reader Request Day. Remember, all you need to do is send an email with your request to me erin@decisionpoint.com.
I would have to say that today I don't have a lot of conviction on the "Diamonds in the Rough" today. While they look good, I believe the market will work against us for a little while. These stocks are set up to do well but they have to work against a weak market.
Natural Gas (UNG) is being covered today. It looks excellent, but I worry that the majority of the rally is over as overhead resistance is here. A breakout would change my tentative outlook. I opted to sell my position to take advantage for taxes so now I'm stuck watching from the sidelines for a few more weeks. That alone should guarantee it will soar.
Don't forget to sign up for tomorrow's Diamond Mine trading room! If you haven't joined us, we invite you to! The group is very active in the chat room and new attendees are always welcomed into the conversation. If you can't attend, remember that you can download the video for up to two weeks.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": PGR, RNA and UNG.
Other requests: EW, AMKBY, ORIC, STTK, MLYS, HIMS, DXJ, EC and WRB.
RECORDING & DOWNLOAD LINK (12/29/2023):
Topic: DecisionPoint Diamond Mine (12/29/2023) LIVE Trading Room
Recording & Download LinkHERE
Passcode: December#29
REGISTRATION for 1/5/2024:
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.
Here is the last recording from 12/18 (no recording on 12/25 or 1/1):
Join Erin for a special edition Trading Room this Tuesday:
Tuesday, 1/9, 2p ET at the "Analyze Your Trade" Live Charting Event. The Event runs January 8th and 9th beginning at 10a ET. Click HERE to sign up.
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.
Progressive Corp. (PGR)
EARNINGS: 01/24/2024 (BMO)
Progressive Corp. is an insurance holding company, which engages in the provision of personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services. It operates through the following segments: Personal Lines, Commercial Lines, and Property. The Personal Lines segment includes agency and direct businesses. The Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and operated predominately by small business in the auto, for-hire transportation, contractor, for-hire specialty, tow, and for-hire livery markets. The Property segment covers residential property insurance for homeowners, other property owners, and renters. The company was founded on March 10, 1937, and is headquartered in Mayfield Village, OH.
Predefined Scans Triggered: New CCI Buy Signals, New 52-week Highs and P&F Double Top Breakout.
PGR is unchanged in after hours trading. Price has now hit overhead resistance and is vulnerable to a pullback, but after that, we should see a breakout. In particular, the PMO is triggering a Crossover BUY Signal above the zero line, that generally is a sign of pure strength. The RSI is positive and not at all overbought. Stochastics is now above 80. Relative strength studies are positive with the group and PGR outperforming the SPY. I've set the stop as close to support as I could at 7.1% or $151.42.
I like the weekly chart quite a bit. It suggests this could be an intermediate-term investment not just a short-term trade. The weekly RSI is in positive territory and isn't overbought. The weekly PMO has surged above the signal line well above the zero line. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70.
*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.
Avidity Biosciences Inc. (RNA)
EARNINGS: 02/27/2024 (AMC)
Avidity Biosciences, Inc. engages in the development of a new class of oligonucleotide-based therapies called Antibody Oligonucleotide Conjugates (AOC). It utilizes its AOC platform to design, engineer, and develop therapeutics that combine the tissue selectivity of monoclonal antibodies and the precision of oligonucleotide-based therapies in order to access previously undruggable tissue and cell types and more effectively target underlying genetic drivers of diseases. The company was founded by Troy E. Wilson, Kent Hawryluk, Mark E. Davis, and Francis Patrick McCormick on November 13, 2012 and is headquartered in San Diego, CA.
Predefined Scans Triggered: P&F Double Top Breakout.
RNA is unchanged in after hours trading. We have a nice cup-shaped basing pattern. Today price closed on the 200-day EMA. This comes after a breakout above resistance. The RSI is getting overbought, but it has flirted with this territory for well over a month. The PMO is definitely overbought which takes some of the shine off the pick, but it does appear it has surged above the signal line and could move even higher. Relative strength is excellent across the board. The stop is set as deep as I felt comfortable at 7.9% or $9.84.
Price is up against sturdy overhead resistance that could signal an upcoming pullback. Other than that the chart is favorable with a positive and not overbought RSI and rising weekly PMO on a Crossover BUY Signal. The SCTR isn't in the hot zone, but it is headed there very quickly. Should it breakout above resistance, it has excellent upside potential.
United States Natural Gas Fund (UNG)
EARNINGS: N/A
UNG holds near-month futures contracts in natural gas, as well as swap contracts. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, Stocks in a New Uptrend (Aroon) and Moved Above Upper Price Channel.
UNG is down -0.17% in after hours trading. I worry that this rally may have gotten too hot and price is now up against overhead resistance. This level of resistance isn't as strong as the next level which has many touches on the resistance line so it is entirely possible we'll get this breakout but not the next one. That would still be a tidy gain. The RSI is positive and not overbought. The PMO is rising more strongly than it has in some time. This looks like strength not diminishing weakness. Stochastics are above 80 and still rising. You'll need to set a deep stop; after all this is UNG which can be very volatile. I've set the stop at 8% or $5.30.
The weekly PMO is turning up for the first time since the prior trading range was established. The weekly RSI remains negative and the SCTR is in the basement so we should consider this a short-term trade.
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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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