This week I'll be doing a presentation on how to find "pure strength" using the PMO. It will be for a group I've presented at before. It will be some discussion of the PMO and then I'll be taking symbol requests as examples. If you'd like to sign up and/or get the recording, just click HERE. I have three more presentations coming up in March covering different topics that will be available for registration soon!
As I go through "Diamonds in the Rough" I address the PMO, but I'll be sure to write when I see pure strength. It is primarily determined by the location of the PMO in relation to the zero line. Certain characteristics will indicate strength, pure strength, diminishing strength, pure weakness and diminishing weakness. This concept isn't new, but it has been rediscovered by Carl and me.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AMWD, INTU, KOP and TPX.
Runner-ups: DASH, DG, EXPI, KMX, MU and TBBK.
RECORDING & DOWNLOAD LINK (2/23/2024):
Topic: DecisionPoint Diamond Mine (2/23/2024) LIVE Trading Room
Recording & Download Link
Passcode: February#23
REGISTRATION for 3/1/2024:
When: Mar 1, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/1/2024) 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 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.
American Woodmark Corp. (AMWD)
EARNINGS: 02/29/2024 (AMC) ** Reports Thursday **
American Woodmark Corp. engages in the manufacture and distribution of kitchen cabinets and vanities for the remodeling and new home construction markets. The company was founded by William F. Brandt, Jr., Richard Al Graber, Jeffrey S. Holcomb and Donald P. Mathias in 1980 and is headquartered in Winchester, VA.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Triple Top Breakout.
AMWD is unchanged in after hours trading. Unfortunately this one does report on Thursday so you may want to wait that out. However, this does look very well positioned going into earnings. We have a strong breakout today that is accompanied by a positive RSI that isn't overbought and a new PMO Crossover BUY Signal. The crossover occurred above the zero line so this likely denotes pure strength. The OBV bottoms are rising, confirming the rising trend. Stochastics are above 80 and relative strength is very favorable with strongly rising relative strength lines. The stop is set beneath the 20-day EMA at 6.9% or $92.81.
The only negative on the chart is the overbought RSI, but it can maintain that level for a handful of weeks. It isn't that overbought either. The weekly PMO has surged above the signal line. It is on the overbought side as well, but this breakout looks incredibly strong. The StockCharts Technical Rank (SCTR) is well within the hot zone* above 70. Upside potential should it reach what appears to be all-time highs is over 19%.
*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.
Intuit, Inc. (INTU)
EARNINGS: 05/21/2024 (AMC)
Intuit, Inc. engages in the provision of business and financial management solutions. It operates through the following segments: Small Business and Self-Employed, Consumer, Credit Karma, and ProTax. The Small Business and Self-Employed segment offers QuickBooks financial and business management online services and desktop software, payroll solutions, payment processing solutions, and financing for small businesses. The Consumer segment includes do-it-yourself and assisted TurboTax income tax preparation products and services. The Credit Karma segment serves consumers with a personal finance platform that provides personalized recommendations of credit cards, home, auto and personal loans, and insurance products, and online savings and checking accounts. The ProTax segment refers to the professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. The company was founded by Scott D. Cook and Thomas A. Proulx in March 1983 and is headquartered in Mountain View, CA.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Triple Top Breakout.
INTU is up +0.09% in after hours trading. Today saw a small breakout to new 52-week highs. This one is flashing pure strength by the PMO. Not only is this PMO Crossover arriving soon, it is occurring well above the zero line. The flat PMO also flashes consistent strength as the stock moves higher without losing momentum. The RSI is positive and not overbought. Stochastics are above 80. INTU regularly outperforms the Software group and the group itself is beginning to see some outperformance. The stop is set beneath support at 7.1% or $621.83.
It's headed to all-time highs and based on this weekly chart it should overcome them. The only problem is an overbought weekly RSI, but we've seen historically that this isn't necessarily going to be an issue. The weekly PMO is on a Crossover BUY Signal and it is well above the zero line, but not overbought. The SCTR is in the hot zone. I would be looking at a 17% upside target around $783.15.
Koppers Holdings Inc. (KOP)
EARNINGS: 02/28/2024 (BMO) ** Reports Tomorrow Morning **
Koppers Holdings, Inc. engages in the provision of treated wood products, wood treatment chemicals and carbon compounds. It operates through the following segments: Carbon Materials and Chemicals, Railroad and Utility Products and Services, and Performance Chemicals. The Carbon Materials and Chemicals segment manufactures carbon pitch naphthalene, creosote, and carbon black feedstock. The Railroad and Utility Products and Services segment sells treated and untreated wood products, manufactured products, and services primarily to the railroad and public utility markets. The Performance Chemicals segment includes development, manufacture, and marketing of wood preservation chemicals and wood treatment technologies for use in the pressure treating of lumber for residential, industrial, and agricultural applications. The company was founded in November 2004 and is headquartered in Pittsburgh, PA.
Predefined Scans Triggered: New CCI Buy Signals, New 52-week Highs and Moved Above Upper Price Channel.
KOP is unchanged in after hours trading. It does report tomorrow morning. It is lined up well going into earnings. The RSI is positive and not overbought. The PMO is showing us pure strength as it goes in for a Crossover BUY Signal. Stochastics are holding above 80, the OBV is rising to confirm the rally. The group is beginning to outperform the SPY and KOP is a leader within the group based on rising relative strength against the group. I'm looking for a breakout after earnings. If it gaps down or sees a deep decline tomorrow, you can consider the position closed. I've set the stop beneath the 50-day EMA at 7.4% or $49.09.
Here is another stock with an overbought weekly RSI. This could pose a problem in the intermediate term based on prior times we've seen overbought conditions. The weekly PMO is rising on a Crossover BUY Signal but looks a little toppy. Keep this one in the short-term timeframe and consider an upside target of about 17% to $62.03.
Tempur-Pedic Intl Inc. (TPX)
EARNINGS: 05/10/2024 (BMO)
Tempur Sealy International, Inc. engages in developing, manufacturing, marketing, and distributing bedding products. Its brands include Tempur, Tempur-Pedic, Sealy, and Stearns and Foster. It operates through the North America and International geographical segments. The North America segment includes Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S. and Canada. The International segment refers to Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America. The company was founded by Robert B. Trussell, Jr. in 1991 and is headquartered in Lexington, KY.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Upper Price Channel, Parabolic SAR Buy Signals, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
TPX is up +0.58% in after hours trading. I like today's breakout to new 52-week highs. The RSI is not yet overbought. The PMO is flashing pure strength as it goes in for a Crossover BUY Signal above the zero line. Volume is coming in on this rally. Stochastics are rising strongly and are near 80. Relative strength for the group is in line with the SPY, but TPX is beginning to outperform both. I've set the stop around the 50-day EMA at 7.6% or $49.77.
Price has been staying above support at the 2021 highs. The weekly RSI is not yet overbought but it is getting a bit close. The weekly PMO is situated above the zero line and has surged or bottomed above the signal line. The SCTR is in the hot zone so this one could be considered more intermediate-term, not just short-term. Consider a 17% upside target to $63.02.
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 70% 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