The market skyrocketed higher today which was unexpected given the weakness that we were seeing on some of our indicator charts, but I'll take it! This has put this week's selections at a disadvantage as they come from defensive areas of the market. While they should do well, relatively speaking they will likely not produce to the degree other stocks will right now.
There is no reason right now to close positions. I believe the strategy of waiting for stops to hit will serve us well. I unfortunately did get stopped out of some positions earlier, but didn't want to chase today. I'm about 40% exposed right now.
Three readers came through with requests and nearly all looked promising. Only one didn't fit the "Diamond in the Rough" mold and that was because the PMO was in decline. Others spiked or looked parabolic.
Interestingly, one of my choices today was requested by two different subscribers so I had to include it. What is interesting is that it is my favorite pick of the day so they must be on to something.
One of today's selections is a leveraged ETF, China 3x Bull ETF (YINN). As always remember you'll need a very deep stop and should position size wisely if you're going to take a chance on this "boom or bust" ETF.
Tomorrow morning is the Diamond Mine trading room! Sign up now! I would love to see some new faces, but remember you can always download a copy of the recording or just watch it online.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": HST, TROX and YINN.
Other requests: STRO, RXRX, COYA, VAC, TNDM, RCUS, EPAM, GPK and GAIN.
RECORDING & DOWNLOAD LINK (2/16/2024):
Topic: DecisionPoint Diamond Mine (2/16/2024) LIVE Trading Room
Recording & Download Link HERE
Passcode: February#16
REGISTRATION for 2/23/2024:
When: Feb 23, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (02/23/2024) 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 2/12 (no recording on 2/19). 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.
Host Hotels & Resorts Inc. (HST)
EARNINGS: 02/21/2024 (AMC) ** Reported Yesterday **
Host Hotels & Resorts, Inc. is a real estate investment trust, which engages in the management of luxury and upper-upscale hotels. It operates through the following geographical segments: United States, Brazil and Canada. The company was founded in 1927 and is headquartered in Bethesda, MD.
Predefined Scans Triggered: New 52-week Highs, P&F Double Top Breakout and Hanging Man.
HST is down -1.55% in after hours trading so a better entry is likely tomorrow. This was the stock that was requested twice. I liked the breakout to new 52-week highs today. I annotated it on the weekly chart, but this looks like a breakout from a bull flag formation that implies much higher prices ahead. The RSI is positive and not overbought. There is a brand new PMO Crossover BUY Signal. Stochastics are above 80 and still rising. HST is outperforming the market and the group is outperforming as well. HST must make up the lion's share of this group as its relative strength to the group is a bit weird looking. The stop is set around the 50-day EMA at 7.3% or $19.15.
You can really see the flag on the weekly chart and today's breakout looks even better here. The RSI is overbought but the weekly PMO is accelerating above the signal line and is not overbought. The StockCharts Technical Rank (SCTR) looks very bullish as it rises within 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.
Tronox Holdings plc (TROX)
EARNINGS: 04/24/2024 (AMC)
Tronox Holdings Plc engages in the mining and inorganic chemical business. Its products include Titanium Dioxide Mineral Sands. The firm also mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments. The company was founded in 2006 and is headquartered in Stamford, CT.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, P&F Double Top Breakout and P&F Triple Top Breakout.
TROX is down -1.97% in after hours trading so it appears it is giving back some of today's big gain, but even that decline would keep it above support. It has been a straight up rally so it is ready to pullback a bit. The RSI is not overbought and there is a PMO Crossover BUY above the zero line. Volume has definitely been coming in based on the OBV, it is confirming the rally. Stochastics are above 80 and rising. Relative strength for TROX is stellar. I've set the stop near the 20-day EMA at 7.8% or $14.02.
The breakout looks really good on the weekly chart. Overhead resistance is nearby, but it is about 11% away. I think it will do better. The weekly RSI is positive and not overbought. The weekly PMO is accelerating above the signal line and zero line. The SCTR is in the hot zone. This looks healthy enough for the intermediate-term timeframe based on this chart. I've marked upside potential to about halfway up the next trading range.
Direxion Daily FTSE China Bull 3x Shares (YINN)
EARNINGS: N/A
YINN provides daily 3x leveraged exposure to a market-cap-weighted index of the 50 largest Chinese stocks traded in Hong Kong. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, Entered Ichimoku Cloud and P&F Double Top Breakout.
YINN is up +0.52% in after hours trading. I like the recent breakout from an ascending triangle formation (rising bottoms, flat top). The declining trend has also been broken. It was an ascending triangle, but it could also pass for a triple bottom. Both patterns are bullish. The RSI is positive and not overbought. The PMO is about to overtake the zero line. This is good news as the prior Crossover BUY Signal could be considered "diminishing weakness" not "strength". Now it looks strong. Stochastics are above 80. You have to set a deeper stop here. This is the minimum I'd say at 8.9% or $17.64.
The breakout looks good on the weekly chart too. It has overcome resistance at the 2022 low. The weekly RSI needs help, but we see the weekly PMO turning up and headed toward a BUY Signal. This is leveraged and thus I would never consider it for an intermediate-term investment. These ETFs should always have a very short time horizon. I've marked 'boom' upside potential about halfway up the prior trading range.
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 40% long, 0% short. Positions stopped out and didn't want to chase today. I'll be running scans for potential candidates tomorrow in the Diamond Mine.
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