There was only one sector that finished higher on the day and that was Consumer Staples (XLP). We had selected Energy (XLE) as our Sector to Watch on Friday, but based on today's decline, the trade is looking less appetizing.
It was no surprise that I did see quite a few Consumer Staples stocks, but they primarily came from the Food Products industry group.
I did find other choices outside of Staples that I've listed as runner-ups. With the market looking weak again, defensive sectors like Staples and Utilities should outperform. I had a few Utilities stocks come up but they weren't up to snuff. I'll be on the lookout for them this week.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CALM, K, MKC and SFM.
Runner-ups: ECPG, DG, ENVA, GIS, UPS and KPC.
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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.
Cal-Maine Foods, Inc. (CALM)
EARNINGS: 04/02/2024 (AMC)
Cal-Maine Foods, Inc. engages in the production, grading, packing, marketing, and distribution of shell eggs. The firm operates farms, processing plants, hatcheries, feed mills, warehouses, offices and other properties. It markets shell eggs to national and regional grocery store chains, club stores, foodservice distributors, and egg product manufacturers. The company was founded by Fred R. Adams Jr. in 1957 and is headquartered in Jackson, MS.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Triple Top Breakout.
CALM is unchanged in after hours trading. Today saw a nice breakout move from a trading range. At the same time, we got a new PMO Crossover BUY Signal above the zero line. The RSI is not overbought. Stochastics just popped above 80. You can see that the industry group is beginning to outperform which bodes well for three of today's stocks. CALM was an easy choice based on relative strength. It is outperforming the SPY, but best of all it has been holding a leadership role for months. The stop is set beneath support at 7.3% or $54.06.
The only issue with the weekly chart is overhead resistance has been met and not yet overcome. However, with the positive daily chart and this positive weekly chart, I would look for a breakout move. The weekly RSI is positive and the weekly PMO is rising well above the zero line and is not overbought. The StockCharts Technical Rank (SCTR) is inside the hot zone* above 70. Consider an upside target of about 17% to $68.23.
*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.
Kellogg Co. (K)
EARNINGS: 05/02/2024 (BMO)
Kellanova engages in the manufacturing, marketing, and distribution of ready-to-eat cereal and convenience foods. It operates through the following segments: North America, Europe, Latin America, and Asia Middle East Africa. The North America segment includes the U.S. businesses and Canada. The Europe segment consists of European countries. The Latin America segment focuses on Central and South America, and Mexico. The Asia Middle East Africa segment is involved in Africa, Middle East, Australia, and Other Asian and Pacific markets. The company was founded by Will Keith Kellogg in 1906 and is headquartered in Chicago, IL.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
K is unchanged in after hours trading. We have a nice double bottom pattern forming. It has technically been confirmed with today breakout above the confirmation line (or middle of the 'W'). The RSI is no where near overbought right now and Stochastics are rising strongly toward 80. There is a new PMO Crossover BUY Signal above the zero line. K is outperforming the group in a big way so this was also an easy selection. We can set a stop that isn't that deep at 6.1% or $52.70.
The weekly chart suggests this could be considered an intermediate-term investment not just a short-term trade. The weekly RSI just reentered positive territory and the weekly PMO is rising strongly. We also have what looks like a bull flag. The SCTR isn't in the hot zone yet, but I like what I see other than that.
McCormick & Co., Inc. (MKC)
EARNINGS: 03/26/2024 (BMO)
McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.
Predefined Scans Triggered: Bullish MACD Crossovers, Moved Above Ichimoku Cloud and Parabolic SAR Buy Signals.
MKC is unchanged in after hours trading. Price has been stuck within a trading range, but this rally push suggests to me we will see an eventual breakout. The RSI is positive and not at all overbought. There is a PMO Crossover BUY Signal brewing. Stochastics are newly rising. This was my last choice today mainly due to the relative performance against the group not being a strong as the others. It is still showing outperformance though against both the group and SPY. The stop was set beneath support at 7.3% or $63.09.
I really like the weekly PMO which has surged above the signal line (bottomed above the signal line). The rest of the chart does need help. Price is really struggling to get above strong overhead resistance. The RSI is negative and the SCTR is way outside the hot zone. Keep this in the short-term timeframe for now. Upside potential is excellent should we get that breakout.
Sprouts Farmers Market Inc. (SFM)
EARNINGS: 02/22/2024 (AMC)
Sprouts Farmers Market, Inc. engages in the operation of healthy grocery stores. The firm specializes in fresh, natural and organic products. Its products include fresh produce, bulk foods, vitamins and supplements, grocery, meat and seafood, deli, bakery, dairy, frozen foods, body care and natural household items. The company was founded by Stan Boney, Shon Alexander Boney, and Kevin K. Easler on July 11, 2002 and is headquartered in Phoenix, AZ.
Predefined Scans Triggered: New 52-week Highs, Filled Black Candles, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
SFM is down -0.38% in after hours trading. We do have a bearish filled black candlestick today and with after hours trading down, you should be able to pick this one up at a lower price point. It has been a consistent winner. The RSI is positive and not yet overbought. There is a new PMO Crossover BUY Signal in motion. Stochastics are above 80. This industry group has been performing well of late and if you're going to fish from this group, SFM is a good selection as it consistently outperforms the group. I've set the stop below support at 7.6% or $49.03.
This looks like a winner that will keep on winning. The big problem with a winner like this one is the issue of an overbought weekly RSI. However, the weekly PMO is rising nicely and we have a SCTR in the hot zone so it should continue to move higher over time. Consider an upside target around 17% or $62.09.
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 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