The scans were empty for ETF Day with the exception of two ETFs that were inverses on Crude and Energy. I still have a positive outlook for these areas of the market still, but this could be warning that another decline is in order before the upside reversal I'm expecting.
Since the scans were bust, I do what I always do. I go to our ETF Tracker and peruse the charts there. You can find the ETF Tracker on the Blogs and Links page at the top of the lefthand menu. It includes the indexes, sectors, Bonds and a good amount of industry groups. I was able to find some interesting picks.
I included the Artificial Intelligence ETF (WTAI) as NVDA's earnings have been received well and could propel this ETF higher.
I didn't include it, but Solar (TAN) is very bullish. I didn't include it because it had a 9% gain today and is due for a pullback. This is an interesting chart to add to your watch list.
I noticed that XLV was looking more bullish so I added the Medical Devices ETF (IHI) and Biotechnology (XBI).
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": IHI, WTAI and XBI.
Runner-ups: ITA, HACK and TAN.
RECORDING & DOWNLOAD LINK (5/17/2024):
Topic: DecisionPoint Diamond Mine (5/17/2024) LIVE Trading Room
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When: May 24, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (5/24/2024) LIVE Trading Room
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Here is the latest recording from 5/20. 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.
iShares U.S. Medical Devices ETF (IHI)
EARNINGS: N/A
IHI tracks a market-cap-weighted index of manufacturers and distributors of medical devices in the US. Click HERE for more information.
Predefined Scans Triggered: None.
IHI is down -0.34% in after hours trading. It had a small breakout and now it is consolidating the move above support. It's in a nice rising trend and it is nearing a Silver Cross of the 20/50-day EMAs. The RSI is positive and not overbought. The PMO just entered positive territory on a Crossover BUY Signal. Stochastics are above 80 but I would prefer that they be rising right now. It is also not performing that well against the SPY. This could be slow going, but this rising trend does suggest we will get some follow through to the upside. You don't need to set a deep stop which is nice. I've set it at 5.8% or $53.33.
The weekly chart is mixed due to the StockCharts Technical Rank being outside the hot zone* and trending lower. The weekly RSI and weekly PMO are positive. The weekly RSI is positive and not yet overbought. The weekly PMO is reversing higher to reinstate the prior Crossover BUY Signal. Upside potential is good given the stop is small.
*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.
WisdomTree Artificial Intelligence and Innovation Fund (WTAI)
EARNINGS: N/A
WTAI tracks an equally-weighted index of globally-listed stocks whose businesses are derived from artificial intelligence and innovation. Selection and weighting are overseen by a committee. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles.
WTAI is down -0.05% in after hours trading. We see a digestion period above support. Unfortunately it saw a bearish filled black candle today, but as noted in the opening, I think NVDA's good earnings will force this one higher tomorrow. There is a Silver Cross of the 20/50-day EMAs on its way. The RSI is positive and not overbought. The PMO is rising and is now above the zero line on a Crossover BUY Signal. Stochastics are holding nicely above 80 and relative strength is improving for the ETF. I've set the stop below support at 6.5% or $19.09.
The weekly chart isn't too bad. The weekly RSI is positive and while the weekly PMO is in decline, it has decelerated the move and looks like it wants to turn back up. The SCTR is not in the hot zone, but it is in a rising trend. I arbitrarily set the upside target at 17.2%. It could go higher, but we need this upcoming breakout.
SPDR S&P Biotech ETF (XBI)
EARNINGS: N/A
XBI tracks an equal-weighted index of US biotechnology stocks. Click HERE for more information.
Predefined Scans Triggered: P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
XBI is down -0.33% in after hours trading. I spotted a reverse head and shoulders pattern. Also a bonus is the new Silver Cross of the 20/50-day EMAs. It is currently stuck beneath resistance but indicators suggest a breakout is possible. The RSI is positive and not overbought. The PMO is rising and is above the zero line. Stochastics are in positive territory and have turned back up. Relative strength is picking up against the SPY. The stop is set beneath support at 7.5% or $85.30.
The weekly chart looks pretty good. The weekly RSI is not overbought and the weekly PMO is turning back up. The SCTR is well within the hot zone above 70. We even see the OBV rising which confirms the current rally. I like the upside potential.
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)
For more links, go to DecisionPoint.com