It was a good week for "Diamonds in the Rough" as they averaged up +1.42% this week with this week's "Darling" finishing higher by +7.06% while the SPY was up only +0.98%. Only three of this week's positions are in the red and two of those are only down -0.42% and -0.09%. This week's "Dud" was down -1.53%.
Of the list this week I would take off CORN which is the "Dud" and has no real reason to hold onto it. Two of the other positions have "Neutral" Sparkle Factors so they could be considered "holds". I had thought this morning that I would scrap the Intuit (INTU) pick, but ultimately with Technology looking so bullish, I decided it may recover. It was only down -0.42%.
I decided to go with Real Estate (XLRE) as this week's Sector to Watch, but Technology came in as a very close second. Ultimately I opted for XLRE given there is new momentum and participation can expand further. The "Industry Group to Watch" was fairly easy to select, Mortgage REITs. I have four symbols from this area: ORC, PMT, ARI (I own ARI) and STWD.
I ran a few scans at the end of the trading room and came up with the following symbols of interest: DXCM, SLM, URI, WIRE, LSCC (I own it) and QRVO. The ones I own, I picked up after the trading room was over. I did not pick them because I own them.
Have a great weekend! See you in the free DecisionPoint Trading Room on Monday at Noon ET!
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:
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.
Below are the commentary and chart from Wednesday, 2/28:
"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."
Here is today's chart:
The chart is just getting better and I could see taking an entry on this one. The PMO is still below the zero line, but is rising strongly suggesting strength not diminishing weakness. Relative strength is beginning to pick up even more. This is a nice rally coming out of a bullish reverse head and shoulders. It's nearly reached the upside target of the pattern, but as we always say, it is the "minimum" upside target. Look for this one to reach the 200-day EMA.
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:
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.
Below are the commentary and chart from Wednesday, 2/28:
"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 $18.56."
Here is today's chart:
The rally failed quickly turning this one into a bearish Sparkle Factor. What went wrong? Well I noted in the commentary that this was really early on the move and the PMO could just be signaling diminishing weakness not new strength. That is exactly what it was. I'd take this off the spreadsheet if I could.
THIS WEEK's Performance:
DecisionPoint Market Scoreboard (Mechanical Trend Model Signals):
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Real Estate (XLRE)
We have a bullish engulfing candlestick based on the open and close for today's OHLC bar. We have a nice cup-shaped base that suggests we'll see more follow through. The PMO is rising above the zero line flashing strength. What convinced me to pick XLRE over XLK was participation. Look at it shooting skyward and the readings are not at all overbought. Stochastics are rising above 80. I see a lot of strength here and it isn't overbought. The Silver Cross Index is closing in on its signal line and the Golden Cross Index is above its signal line. Relative strength is just beginning to seep in.
Industry Group to Watch: Mortgage REITs ($DJUSMR)
I liked the rally above the key moving averages and the opportunity to expand before reaching overhead resistance. The PMO is on a new Crossover BUY Signal, it's close enough to the zero line to consider we may be looking at strength not just diminishing weakness. Stochastics are above 80 and the RSI is not overbought. Symbols of interest from this area: ORC, PMT, ARI and STWD.
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 75% long, 0% short. I own ARI and LSCC.
Watch the latest episode of the DecisionPoint Trading Room with Carl & Erin Swenlin on Mondays 3:00p EST!
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."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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