We had a productive trading room this morning that uncovered plenty of new symbols for you to consider moving into next week. I'm not thrilled with market behavior into the close and I'm seeing significant weakness in Technology right now. Today the Swenlin Trading Oscillators (STOs) turned down so I would say it's time for an air pocket.
There is a clear theme in Energy (XLE) right now. It is primed to continue higher as money begins rotating there. I presented the Oil Equipment & Services (IEZ) ETF last week and this week I found DIG which is an ultra ETF for Integrated Oil & Gas that will be our Industry Group to Watch. Our big winner of the week was yesterday's Energy holding, AROC. The theme is Energy moving into next week. I believe there is more upside to be had there.
Earnings are coming in and I would remind you to consider turning off your positions going into their earnings. I got caught on the wrong side of Intel (INTC) because I foolishly held through earnings. It was down almost 12% today. I'm not saying you should sell, but given market weakness coming in anyway, it might not be a bad idea. Just don't come after me if you see a gap up on earnings!
If I had the opportunity to do so, I would turn off this week's position in the Metaverse ETF. Price action showed a breakdown today on some bearish candlesticks and given the weakness I perceive in Technology, this isn't going to be a good investment in the short term.
We ran the Momentum Sleepers scan during the Diamond Mine trading room and I was able to uncover two good symbols from the results: DAN and DINO. I particularly like DINO and may put in a position there as I lighten the load in my portfolio on upcoming earnings.
I looked inside two industry groups in the Diamond Mine to find more symbols. From Integrated Oil & Gas there was NGL, PBR/A, PSX and AM. From the Pipelines group I found PAA, ENLC and ET.
Have a great weekend!
Good Luck & Good Trading,
Erin
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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:
Archrock, Inc (AROC)
EARNINGS: 02/20/2024 (AMC)
Archrock, Inc. engages in the provision of operations, maintenance, service and equipment for oil and natural gas production, processing, and transportation applications. It operates through the Contract Operations and Aftermarket Services. The Contract Operations segment includes the owned fleet of natural gas compression equipment that the company uses to provide operations services. The Aftermarket Services segment sell parts and components, and provides operations, maintenance, overhaul, and reconfiguration services to customers. The company was founded in 1954 and is headquartered in Houston, TX.
Predefined Scans Triggered: New 52-week Highs and Moved Above Upper Price Channel.
Below are the commentary and chart from yesterday, 1/25:
"AROC is unchanged in after hours trading. It is currently at overhead resistance so we could see a small pullback before a breakout. The indicators look very favorable. The RSI is positive and not overbought and there is a new PMO Crossover BUY Signal above the zero line that suggests 'pure strength'. Stochastics did tip over which also speaks to a possible pullback first, but they remain above 80 suggesting internal price strength. The stop is set near the 50-day EMA around 7.2% or $14.84."
Here is today's chart:
Today saw a beautiful breakout on AROC. Unfortunately this has pushed the RSI into overbought territory, but based on last August, overbought conditions can persist for this stock. The PMO is accelerating higher and Stochastics are rising strongly while above 80. If you're going to be in this group, this is the stock to do so given its outperformance in the intermediate term. Look for higher prices. I own COHR.
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:
Vontier Corporation (VNT)
EARNINGS: 02/15/2024 (BMO)
Vontier Corp. engages in the provision of critical technical equipment, components, software and services for manufacturing, and repair and servicing in the mobility infrastructure industry worldwide. It supplies solutions, spanning advanced environmental sensors, fueling equipment, field payment hardware, remote management and workflow software, vehicle tracking and fleet management software solutions for traffic light control and vehicle mechanics and technicians equipment. The company was founded in 2019 and is headquartered in Raleigh, NC.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel and P&F Double Top Breakout.
Below are the commentary and chart from Monday, 1/22:
"VNT is up +0.08% in after hours trading. Here is another great looking breakout on a follow-through day (3rd rally day). The EMAs are configured very positively with plenty of margin between them. The RSI is positive and rising. The PMO just triggered a Crossover BUY Signal above the signal line which generally means 'pure strength' to the move. Stochastics are back above 80. Relative strength is just now picking up a bit for the industry group. VNT is an outperformer against both the group and the SPY. The stop is set beneath support at 7.5% or $33.08."
Here is today's chart:
I honestly couldn't have picked a worse time for this stock. It basically hit its high and then spent the rest of the week tumbling lower on very bearish candlesticks. The rising trend is still intact, but given the new PMO Crossover SELL Signal, I would avoid this one. The RSI is still positive, but it is nearing negative territory. I can't say that there was anything on the chart to imply we would see this decline.
THIS WEEK's Performance:
DecisionPoint Market Scoreboard (Mechanical Trend Model Signals):
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Energy (XLE)
This is where the new momentum lies. We have more rising PMOs amongst the sectors, but Energy fit the bill today as it wasn't overbought and relative strength is picking up. Yesterday's breakout above the 50/200-day EMAs was prescient as we saw even more follow through today. The PMO is on a new Crossover BUY Signal and while it is occurring beneath the zero line, I think it is clear through price action that we are experiencing strength, not just diminishing weakness. Look at the percentage of stocks gaining above key moving averages. The Silver Cross Index and Golden Cross Indexes aren't rising right now, but they are at least flat and they definitely will see improvement if participation remains strong.
Industry Group to Watch: Integrated Oil & Gas (DIG)
As noted in the opening, I'm going all in on Energy and this industry group looked very good. I also liked Pipelines, but I looked at a lot of charts within during the trading room and there weren't as many choices as I would've liked. This industry group looked great and should continue to see some positive movement given the new PMO BUY Signal. As with XLE, I see this as strength not diminishing weakness. We have a brand new ST Trend Model BUY Signal based on the positive crossover of the 5/20-day EMAs. It is not overbought despite the strong rally and Stochastics are rising vertically toward 80. Relative strength is picking up. I think the Energy sector will have an excellent week ahead.
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 60% long, 0% short.
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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."
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DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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