I will be returning to our regular schedule for DP Diamonds next week. Thank you so much for your support and understanding regarding the loss of my mother.
Thank you to all who sent in Reader Requests. I'm sorry that I can only choose three so some of you won't see your symbols. One of the symbols, DDOG was requested by two different subscribers so I included it. One of the others is an inverse bear fund for Real Estate. I suspect this sector of the market will suffer as interest rates begin rising again. The final choice is Costco (COST), the daily chart looks good, but the weekly chart does not. Keep it short-term.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": COST, DDOG and SRS.
Other requests: STEP, VECO, CDNS, SANA, OSCR, YRD, PROP, DRV, TAL, MP, AIV, CPS, DMLP, ALXO and SA.
RECORDING & DOWNLOAD LINK (3/29/2024):
Topic: DecisionPoint Diamond Mine (3/29/2024) LIVE Trading Room
Recording & Download LINK
Passcode: March#28
REGISTRATION for Friday (4/19/2024) Diamond Mine :
When: Apr 19, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (4/19/2024) 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 4/1. 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.
Costco Wholesale Corp. (COST)
EARNINGS: 05/30/2024 (AMC)
Costco Wholesale Corp. engages in the operation of membership warehouses through wholly owned subsidiaries. It operates through the following geographical segments: United States, Canada, and Other International Operations. The company was founded by James D. Sinegal and Jeffrey H. Brotman in 1983 and is headquartered in Issaquah, WA.
Predefined Scans Triggered: Bullish MACD Crossovers, Hollow Red Candles and P&F Low Pole.
COST is down -0.17% in after hours trading. Price is rallying off support and appears ready to reverse the declining trend. It is a toppy formation, but I'm seeing some positive signs. The RSI is positive and the PMO is rising above the zero line. Stochastics are rising and suggest more upside ahead. The group is not doing well relatively, but COST is outperforming the SPY so I'll accept it. The stop is set midway between the last two levels of support at 6.6% or $683.04.
As noted in the opening, the weekly chart needs help. The weekly PMO is the big problem with its nearing Crossover SELL Signal. Fortunately the weekly RSI is positive and the StockCharts Technical Rank (SCTR) is in the hot zone. Consider a 17% upside target to $855.63.
*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.
Datadog Inc. (DDOG)
EARNINGS: 05/02/2024 (BMO)
Datadog, Inc. engages in the development of a monitoring and analytics platform for developers, information technology operations teams and business users. Its platform integrates and automates infrastructure monitoring, application performance monitoring and log management to provide real-time observability of its customers' entire technology stack. The company was founded by Olivier Pomel on June 4, 2010, and is headquartered in New York, NY.
Predefined Scans Triggered: Elder Bar Turned Blue, P&F Ascending Triple Top Breakout, Entered Ichimoku Cloud and P&F Double Top Breakout.
DDOG is down -0.41% in after hours trading. I like the basing pattern that has formed with a rally easing out of it. The RSI is positive and not overbought. The PMO is rising above the zero line on a Crossover BUY Signal. I'm not thrilled that Stochastics are topping, but they are well within positive territory above net neutral (50). Relative strength studies are positive. The stop is set beneath support at 7.5% or $117.94.
This is another with a favorable daily chart but a weekly chart that has weekly PMO problems. I like that we have a weekly RSI in positive territory and a SCTR that is in the hot zone. The problem is the weekly PMO Crossover SELL Signal and continued decline. This does look like a good place for a reversal, but we need not throw caution to the wind. Keep this one on a tight leash. Upside potential is exciting, but as I said, for now keep it short-term.
ProShares UltraShort Real Estate (SRS)
EARNINGS: N/A
SRS provides 2x inverse exposure to a market cap-weighted index of large US real estate companies, including REITs.
Predefined Scans Triggered: Moved Above Upper Price Channel.
SRS is up +0.98% in after hours trading. Price has not broken out yet, but as noted in the opening, I see interest rates rising and that will cause more gravity for Real Estate. We do have a new IT Trend Model BUY Signal on the Silver Cross of the 20/50-day EMAs. The RSI is positive and not overbought. The PMO is rising above the zero line and increasing its margin from the signal line. Stochastics are rising above 80 and we can see it is beginning to outperform the SPY. We need to set a deep stop (probably deeper than this) given it is a leveraged ETF. I've set it at 10.5% or $14.68.
The weekly chart looks very good as price rebounds just above support. The weekly RSI just hit positive territory and the weekly PMO is triggering a Crossover BUY Signal. This ETF is set up well as a hedge. Upside potential is excellent.
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
(c) Copyright 2024 DecisionPoint.com
Watch the latest episode of DecisionPoint Trading Room with Carl & Erin Swenlin Mondays on the DecisionPoint YouTube channel here!
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