Knowing what I know about how weak the broad markets are, it really didn't surprise me to see very few results for my scans. I almost went ahead and proposed some shorts, but I ended up finding some stocks on the buy side.
I would be especially careful about adding new positions right now. Today's selections are primarily short-term in nature. All positions should have stops on and hedges aren't necessarily a bad idea either. Some of the ones I like using are DRV (inverse Real Estate), SDOW (inverse Dow) and TECS (inverse Technology). These are just a few ideas to hedge your account. These vehicles should not be primary investment vehicles. I'll present one or two tomorrow for ETF Day.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ALVO, AMSF, ARCH and HG.
RECORDING & DOWNLOAD LINK (3/29/2024):
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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.
Alvotech (ALVO)
EARNINGS: 05/21/2024 (AMC)
Alvotech is a biotechnology company, which engages in the development and manufacture of biosimilar medicines. The firm is focusing on the development of its product candidates. It operates through the following geographical segments: Europe, North America, Asia, and Other. The company was founded by Robert Vilhelm Wessman on August 23, 2021 and is headquartered in Luxembourg.
Predefined Scans Triggered: None.
ALVO is down -1.65% in after hours trading so it appears to be taking back today's gain already. Still, I like its chances. There is a bullish double bottom pattern. It could be struggling after hours based on overhead resistance. The RSI is negative, but the PMO is turning up toward a Crossover BUY Signal. It is below the zero line so use caution. Stochastics are rising toward 80 in positive territory. The group isn't performing so well, but ALVO is showing leadership and is hence outperforming the SPY. The stop is set at the 200-day EMA at 7.8% or $11.73.
The weekly PMO doesn't look good at all, but the weekly RSI is in positive territory again. Also, the StockCharts Technical Rank (SCTR) is in the hot zone* above 70. I'm not so sure it will reach the upside potential target, but I do see an opportunity to gain at least 13% before it reaches overhead resistance.
*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.
AMERISAFE, Inc. (AMSF)
EARNINGS: 04/24/2024 (AMC)
AMERISAFE, Inc. engages the provision of workers' compensation insurance focused on small to mid-sized employees. The firm covers the construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime industries. The company was founded by Millard E. Morris in 1985 and is headquartered in DeRidder, LA.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers and P&F High Pole.
AMSF is unchanged in after hours trading. I like this reversal that occurred well above support. It is now above overhead resistance. The RSI is negative but rising. The PMO is curling upward toward a Crossover BUY Signal. It is below the zero line so it should be looked at as diminishing weakness right now. A Crossover BUY Signal would show strength. Stochastics do suggest higher prices ahead. Relative strength is beginning to pick up for the group. AMSF was already outperforming. The stop is set near support at 7.7% or $45.08.
The weekly chart needs some help so consider this short-term. The weekly RSI is positive now, but the weekly PMO just triggered a Crossover SELL Signal and the SCTR is not in the hot zone. If it can reach prior highs it would be an almost 16% gain.
Arch Coal, Inc. (ARCH)
EARNINGS: 04/25/2024 (BMO)
Arch Resources, Inc. engages in the production and distribution of thermal coal. It operates through the following segments: Metallurgical, Thermal, and Idle and Other. The Metallurgical segment contains the company's metallurgical operations in West Virginia. The Thermal segment refers to the company's thermal operations in Wyoming and Colorado. The company was founded in 1969 and is headquartered in St. Louis, MO.
Predefined Scans Triggered: Elder Bar Turned Green, P&F Double Top Breakout and P&F Bearish Signal Reversal.
ARCH is up +0.05% in after hours trading. This has been mostly rangebound but it could see a breakout based on the positive indicators. The RSI is positive and rising. The PMO is on a new Crossover BUY Signal. The OBV is confirming the rising trend and Stochastics are rising toward 80 in positive territory. Coal is beginning to outperform the SPY and ARCH is already outperforming the group and the SPY. The stop is set at the 200-day EMA at 7.6% or $153.31.
I like this bounce off support. The weekly RSI is positive and the weekly PMO is turning back up. The SCTR is rising strongly and is nearly in the hot zone. While I'm not thrilled with the price pattern currently as it looks toppy, the indicators do suggest we will get a breakout. Consider a 17% upside target around $194.12.
Hamilton Insurance Group Ltd. (HG)
EARNINGS: N/A
Hamilton Insurance Group Ltd. is a holding company, which provides insurance and reinsurance services. It operates through the International and Bermuda segments. The International segment comprises of property, specialty, and casualty insurance and reinsurance classes of business originating from the company's London, Dublin, and Hamilton Select operations. The Bermuda segment offers property, specialty, and casualty insurance and reinsurance classes of business originating from Hamilton Re, Bermuda and Hamilton Re US and subsidiaries. The company was founded in 2013 and is headquartered in Hamilton, Bermuda.
Predefined Scans Triggered: P&F Double Bottom Breakdown.
HG is down -4.95% in after hours trading so the shine has come off this one already. However, if the indicators are right, we should see more upside. Maybe this could offer a better entry. There is a nice bullish double bottom pattern that immediately caught my eye. The RSI is positive and the PMO is rising on a Crossover BUY Signal. Strength could be coming in. Stochastics are rising strongly and relative strength looks very positive for HG. The group is also beginning to see a little outperformance. I've set the stop as close to support as I could at 7.4% or $12.73.
The weekly chart has no real information to analyze. It seems to be trying to find its way after its IPO.
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.
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)
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