Three sectors were prominent in today's scans, Energy, Healthcare and Industrials. While I don't have a Healthcare stock today, I do have an Energy and an Industrial pick.
The other two sectors represented by Diamonds in the Rough today are Technology and Utilities. I found a stock from the hot Utilities sector that has spent time digesting a previous rally and looks ready to move even higher. Technology is still faring well so I included an interesting addition.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CEG, HUBB, TRGP and TT.
Runner-ups: MATV, EPAC, TDG, FLR, CVI and PUMP.
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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.
Constellation Energy Corp. (CEG)
EARNINGS: 08/08/2024 (BMO)
Constellation Energy Corp. engages in the generation, supply, and marketing of clean electricity, and renewable energy products and solutions. The firm also offers wholesale energy, retail products and services. It operates under the following geographical segments: Mid-Atlantic, Midwest, New York, Electric Reliability Council of Texas (ERCOT), and Other Power Regions Segment. The company was founded in 1960 and is headquartered in Baltimore, MD.
Predefined Scans Triggered: Elder Bar Turned Green and Moved Above Upper Keltner Channel.
CEG is up +0.41% in after hours trading. I will point out that this one does have an overbought RSI, but based on history, it doesn't seem to be fatal for CEG. Price has formed a flag as the prior rally was digested. It looks ready to break out again. The PMO has surged (bottomed) above the signal line. Stochastics moved back into territory above 80. Relative strength studies are very bullish with all relative strength lines rising. I've set the stop at the 20-day EMA at 7.6% or $205.67.
We do have a nearly vertical rally on the weekly chart which does tell us to proceed with some amount of caution given the weekly RSI is so overbought. The weekly PMO is rising strongly and the StockCharts Technical Rank (SCTR) is at the top of the hot zone*. Consider a 17% upside target to $260.43.
*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.
Hubbell, Inc. (HUBB)
EARNINGS: 07/30/2024 (BMO)
Hubbell, Inc. engages in the designing, manufacturing, and sale of electrical and electronic products for non-residential and residential construction, industrial, and utility applications. It operates through the Electrical Solutions and Utility Solutions segments. The Electrical Solutions segment manufactures and sells wiring and electrical, lighting fixtures, and controls for indoor and outdoor applications as well as specialty lighting and communications products. The Utility Solutions segment is involved in the design, manufacture, and sale of electrical distribution, transmission, substation, and telecommunications products. The company was founded by Harvey Hubbell II in 1888 and is headquartered in Shelton, CT.
Predefined Scans Triggered: Elder Bar Turned Green.
HUBB is down -0.25% in after hours trading. I spotted a bullish reverse head and shoulder pattern on HUBB. It hasn't been confirmed. That will take a breakout above the neckline which is the next level of overhead resistance. The RSI just hit positive territory and the PMO is on a Crossover BUY Signal. Stochastics have turned back up. Relative strength for the group is good overall. We are just now beginning to see some outperformance by HUBB. I set the stop below the left and right shoulders of the chart pattern at 7% or $375.72.
The weekly PMO looks terrible, but I do see a bullish flag formation. The weekly RSI is positive and not overbought and the SCTR is in the hot zone above 70. Still, I would keep this one with a short-term horizon in case the flag needs to lengthen.
Targa Resources Corp. (TRGP)
EARNINGS: 08/01/2024 (BMO)
Targa Resources Corp. provides midstream natural gas and natural gas liquids services. It also provides gathering, storing, and terminaling crude oil, and storing, terminaling, and selling refined petroleum products. It operates through the Gathering and Processing and Logistics and Transportation segments. The Gathering and Processing segment includes assets used in the gathering of natural gas produced from oil and gas wells and processing this raw natural gas into merchantable natural gas by extracting NGLs and removing impurities, and assets used for crude oil gathering and terminaling. The Logistics and Transportation segment focuses on the activities necessary to convert mixed NGLs into NGL products and provides certain value-added services such as the storing, fractionating, terminaling, transporting and marketing of NGLs and NGL products, including services to LPG exporters, and the storing and terminaling of refined petroleum products and crude oil and certain natural gas supply and marketing activities in support of its other businesses. The company was founded in October 2005 and is headquartered in Houston, TX.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Price Channel and P&F Double Top Breakout.
TRGP is up +0.47% in after hours trading. I like the Energy sector for a reversal and this is already a strong performer within the sector. Today price broke out to new 52-week highs out of a trading range. The RSI is positive and not quite overbought yet. The PMO is about to trigger a Crossover BUY Signal. Stochastics are above 80. The group is underperforming, but TRGP is outperforming both the group and the SPY. I'm looking for more outperformance. The stop is set beneath support at 7.3% or $109.57.
The weekly RSI is overbought, but not as overbought as it has been. Look at the beautiful long-term rising trend. The weekly PMO has surged above the signal line and the SCTR is in the hot zone above 70. Consider a 17% upside target to $138.29.
Trane Technologies Inc (TT)
EARNINGS: 07/31/2024 (BMO)
Trane Technologies Plc engages in providing solutions to buildings, homes, and transportation. It operates through the following business segments: Americas, EMEA, and Asia Pacific. The Americas segment encompasses commercial heating and cooling systems, building controls, and energy services and solutions, residential heating and cooling, and transport refrigeration systems, and solutions in North America and Latin America regions. The EMEA segment includes heating and cooling systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions in Europe, Middle East, and Africa regions. The Asia Pacific segment is involved in heating and cooling systems, services and solutions for commercial buildings and transport refrigeration systems and solutions in Asia Pacific region. The company was founded in 1871 and is headquartered in Swords, Ireland.
Predefined Scans Triggered: Elder Bar Turned Green, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
TT is down -0.18% in after hours trading. Price closed below overhead resistance. It appears ready to confirm a bullish flag formation. The RSI is positive and not yet overbought. The PMO has surged above the signal line well above the zero line. Stochastics have tipped back up into territory above 80. The group is beginning to see some outperformance. TT is very strong relatively to both the group and the SPY. The stop is set into the prior gap at 7.8% or $309.41.
It isn't surprising to see the weekly RSI so overbought given the strength of this rally out of 2022 lows. While overbought conditions aren't ideal, they are persistent and that hasn't stopped the rally. The weekly PMO has surged above the signal line and the SCTR is at the top of the hot zone. Consider a 17% upside target to $392.64.
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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.
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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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