The ETF scans didn't produce very many choices so I had to do a visual scan of our ETF Tracker to fill out today's selections.
One of the ETFs you'll find on today's runner-up list is the infamous UNG. It is set up quite well right now, but I couldn't subject you (and me) to another round there. If you want to dabble, now looks pretty good, but we know how UNG hasn't always done what the indicators say it should do.
Another runner-up that I almost presented was Real Estate (XLRE) or its leveraged 3x bull (DRN). You know that I was close to presenting it as our Sector to Watch this week. Today it saw a very good rally, but under the hood it wasn't as good looking at the Biotech ETF (IBB) which I am presenting.
I had some aggressive ETFs arrive with ARKG, ARKK and ARKW, but I sense weakness in the market and want to avoid these ETFs which tend to be aggressive plays.
On the opposite side I had a number of Bond funds arrive in the scan results. I still see interest rates rising in the future and thought that what I'm seeing is diminishing weakness, not new strength in Bonds.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CORN, IBB and REMX.
Runner-ups: ARKG, ARKK, ARKW, XLRE, DRN, UNG, LIT and SLX.
RECORDING & DOWNLOAD LINK (2/23/2024):
Topic: DecisionPoint Diamond Mine (2/23/2024) LIVE Trading Room
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Passcode: February#23
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When: Mar 1, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/1/2024) LIVE Trading Room
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Here is the latest recording from 2/26. Click HERE to subscribe to the DecisionPoint YouTube Channel to be notified when new content is available.
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.
Teucrium Corn Fund (CORN)
EARNINGS: N/A
CORN tracks an index of corn futures contracts. It reflects the performance of corn by holding Chicago Board of Trade corn futures contracts with three different expiration dates.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Elder Bar Turned Green, Bullish MACD Crossovers and P&F Triple Bottom Breakdown.
CORN is unchanged in after hours trading. CORN is rebounding out of a strong declining trend. This is very early in the move and could turn south as the PMO could just be signaling diminishing weakness rather than new strength. Still, this is a pretty impressive little rally. The RSI is rising, but is in negative territory currently. Stochastics are rising very strongly but aren't yet above net neutral (50). It is just now beginning to outperform the market. I've set a nice thin stop at 5.3% or $18.56.
We can see this rebound is coming off very strong support. Corn is at levels not seen in over two years. While it could move lower from here, this does seem a good launch point. The weekly RSI is oversold. The weekly PMO is unfortunately in decline and the SCTR unsurprisingly is in the basement, nowhere near the hot zone* above 70. Upside potential is great at 17.7% given the thin stop. I might give this one a try.
*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.
iShares Nasdaq Biotechnology ETF (IBB)
EARNINGS: N/A
IBB tracks the performance of a modified market-cap-weighted index of US biotechnology companies listed on US exchanges. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Blue, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
IBB is down -0.12% in after hours trading. IBB broke out yesterday and pulled back to the breakout point today. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal above the zero line suggesting pure strength in this move. The Silver Cross Index and Golden Cross Index are configured bullishly above their signal lines and rising. Participation of stocks above key moving averages is well above our bullish 50% thresholds and could support more rally. Stochastics are oscillating above 80 and we are seeing new relative strength slowly coming in. The stop can be set beneath support at 6.1% or $130.91.
This is a nice breakout from strong overhead resistance. The weekly RSI is positive, rising and isn't overbought. The weekly PMO is accelerating higher and the SCTR is almost in the hot zone. There is plenty of upside potential before it reaches strong resistance.
VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)
EARNINGS: N/A
REMX tracks an index of global companies that mine, refine, or recycle rare earth and strategic metals. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Price Channel, Parabolic SAR Buy Signals and P&F Double Top Breakout.
REMX is up +0.01% in after hours trading. I like the bullish reverse head and shoulders that has formed here. It is a constructive bottom. Clearly when the PMO first gave us the buy signal it was signaling diminishing weakness. But as the rally has begun to strengthen, I see the PMO as reflecting strength again. The RSI is in positive territory and not at all overbought. Stochastics just moved above 80. I noticed that Lithium (LIT) also had a similar bullish setup. The stop is set beneath very short-term support at 7.7% or $46.83.
This rally is coming off very strong support at the 2020 highs. Unfortunately we do need the other indicators to ripen more before we consider this for the intermediate term. The weekly RSI is moving higher, but is in deeply negative territory right now. The weekly PMO has decelerated, but hasn't really turned higher. The SCTR is terrible. If we continue to see this rally expand, I've opted to set the upside target near the last 2023 top.
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 65% 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