I mentioned yesterday that Healthcare stocks were heavily represented in yesterday's scan results. Today, the scans were very limited. There aren't a lot of good choices out there right now, but with the new surge in Healthcare, I was able to find two ETFs to take advantage.
The third choice is okay. In general I would avoid getting too heavily exposed. Consider this third choice as a teaching chart not necessarily a great investment. The market is looking weak again and this took away much of the choices for ETF Day.
Basically we need to proceed with caution. Heavy exposure isn't likely a good idea right now. Be sure you have stops set on all of your positions.
Tomorrow is Reader Request Day. I would love to see lots of symbols in my email box tomorrow!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": IBB, LVHD and XLV.
RECORDING & DOWNLOAD LINK (4/26/2024):
Topic: DecisionPoint Diamond Mine (4/26/2024) LIVE Trading Room
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Passcode: April#26
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When: May 3, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (5/3/2024) LIVE Trading Room
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Here is the latest recording from 4/29. 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 Nasdaq Biotechnology ETF (IBB)
EARNINGS: N/A
IBB tracks the performance of a modified market-cap-weighted index of US biotechnology companies listed on US exchanges.
Predefined Scans Triggered: Elder Bar Turned Green.
IBB is down -0.22% in after hours trading. I liked the double bottom pattern that was confirmed with today's rally. This rebound also appears to be coming off strong support. This is probably the best chart today. While the RSI isn't positive, it is on its way. The PMO is going in for a Crossover BUY Signal. Stochastics are rising and have hit positive territory. Relative strength is picking up for the industry group. I've set the stop at 6% or $121.72, but if it drops below the double bottom, the pattern will be busted and it would be wise to exit.
The weekly chart is improving but is still negative. The weekly RSI is rising but is in negative territory. The weekly PMO has decelerated its decline but ultimately it is falling on a Crossover SELL Signal. The StockCharts Technical Rank (SCTR) is rising strongly but is still outside the hot zone*.
*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.
Legg Mason Low Volatility High Dividend ETF (LVHD)
EARNINGS: N/A
LVHD tracks an index of roughly 50-100 US stocks selected from across the market cap spectrum. Stocks are selected and weighted to emphasize profitability, high dividends, low price volatility and low earnings volatility. Click HERE for more information.
Predefined Scans Triggered: New 52-week Highs, Stocks in a New Uptrend (ADX) and P&F Double Top Breakout.
LVHD is down -0.61% in after hours trading. This is my least favorite chart today. It does have a bull flag, but it has been range bound for awhile. Still it does have good qualities. The RSI is positive. The PMO is on a Crossover BUY Signal above the zero line. Stochastics have turned up again. Relative strength also looks very good. I've set the stop beneath strong support at 6.1% or $33.86.
This ETF is extremely range bound. If the range holds up we will only see about a 7.4% gain, but it does have some bullish characteristics that could push it past that resistance level. The weekly RSI is positive and has been for over a month. The weekly PMO has bottomed above the signal line and is rising. The SCTR needs help but it is at least trending higher.
Health Care Select Sector SPDR Fund (XLV)
EARNINGS: N/A
XLV tracks health care stocks from within the S&P 500 Index, weighted by market cap.
Predefined Scans Triggered: Elder Bar Turned Green.
XLV is up +0.34% in after hours trading. We have a small double bottom pattern that suggests we will see upside follow through. The RSI is still negative, but the PMO is nearing a Crossover BUY Signal. The Silver Cross Index has turned back up and the Golden Cross Index is also rising. Participation could be better as it is below our 50% bullish threshold. Stochastics are rising and we are seeing some new relative strength against the SPY. I've set the stop at 6.2% or $131.86 but you don't have to wait that long if it loses the 200-day EMA as support.
This is a very strong level of support. If it's broken you don't need to stick around. The weekly PMO is a problem so keep this in the short-term timeframe. The weekly RSI is positive but the SCTR is outside the hot zone. The SCTR is rising so the complexion of this chart could change.
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 30% 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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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