The market may've closed higher, but it seems to have been led by NVDA. The market internals are not great and this is represented by the lack of scan results. I nearly ran the Diamond Dog Scan for shorting opportunities. We may move that way by the end of the week depending on the market trend. Currently the market trend is up so I prefer to stay away from shorts.
The scans that did come through for us today were the PMO Crossover Scan and Surge Scan. I would still be cautious moving forward. It is going to be harder and harder to find longs.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AA, AHCO, CLB and WDC.
Runner-up: CRK.
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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.
Alcoa Corp. (AA)
EARNINGS: 07/17/2024 (AMC)
Alcoa Corp. engages in the production of bauxite, alumina, and aluminum products. Its Products include ecolum, ecosource & ecodura. The company operates through the following segments: Bauxite, Alumina, and Aluminum. The Bauxite segment represents the company' global bauxite mining operations. The Alumina segment includes the company's worldwide refining system, which processes bauxite into alumina. The Aluminum segment combines smelting and casting operations to produce primary aluminum. The company was founded by Charles Martin Hall on July 9, 1886 and is headquartered in Pittsburgh, PA.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals and Moved Above Upper Keltner Channel.
AA is down -0.39% in after hours trading. The bull flag caught my attention when I saw this chart. It has been confirmed with today's rally which implies more upside ahead. The RSI is positive and not overbought. The PMO looks great as it has surged above the signal line well above the zero line. Stochastics have turned back up. The industry group has been on fire based on relative strength. Since AA is the main contributor to the industry group, it is outperforming the SPY as well. The stop is set near the 20-day EMA at 7.6% or $39.93.
We see a cup shaped bottom on the weekly chart which is a good basing pattern for price to continue higher from. The weekly RSI is unfortunately overbought, but we have seen it maintain this level before. The weekly PMO is rising strongly and is not overbought yet. The StockCharts Technical Rank (SCTR) is at the top of the hot zone* above 70. It has great upside potential before hitting 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.
AdaptHealth Corp (AHCO)
EARNINGS: 08/06/2024 (BMO)
AdaptHealth Corp. engages in the provision of home healthcare equipment, supplies and related services. It focuses on sleep therapy equipment to individuals suffering from obstructive sleep apnea (OSA), home medical equipment to patients discharged from acute care and other facilities, oxygen and related chronic therapy services in the home, and HME medical devices and supplies on behalf of chronically ill patients with diabetes care, wound care, urological, ostomy, and nutritional supply needs. The company was founded in 2012 and is headquartered in Plymouth Meeting, PA.
Predefined Scans Triggered: Filled Black Candles and P&F High Pole.
AHCO is unchanged in after hours trading. We have a bullish double bottom. It did see a filled black candlestick today which does imply a down day tomorrow. This low-priced and could be considered a 'boom or bust' type stock so it could be a big winner or a big stinker so position size wisely. The RSI is positive and not overbought. The PMO has just had a positive crossover its signal line for a BUY Signal. Stochastics are rising and suggest more follow through ahead. The industry group is sickly and that could put some downside pressure on this one, but so far it hasn't really affected its outperformance against the SPY. I set the stop below the last low at 7% or $9.40.
It is getting very close to overhead resistance, but even if it just makes it there it would be an over 17% gain. The weekly PMO has surged above the signal line and the SCTR is nearly in the hot zone.
Core Laboratories N V (CLB)
EARNINGS: 07/31/2024 (AMC)
Core Laboratories, Inc. provides proprietary and patented reservoir description and production enhancement services. The company was founded on May 1, 2023 and is headquartered in Houston, TX.
Predefined Scans Triggered: P&F Double Top Breakout.
CLB is down -0.05% in after hours trading. Here is another bull flag formation that is being confirmed with a breakout. The RSI is positive and not overbought. The PMO has surged above the signal line suggesting more follow through. It is well above the zero line. Stochastics had topped, but they are beginning to turn back around already. The industry group is suffering as much of Energy is, but I'm still looking for an eventual breakout. Relative strength is good against the SPY. The stop is set at the 50-day EMA around 7.7% or $17.12.
This one has some excellent upside potential if it can keep the rally going. Based on the positive weekly RSI and rising weekly PMO, we should see more upside follow through. The SCTR is not in the hot zone, but it is rising strongly enough for it to be considered a positive.
Western Digital Corp. (WDC)
EARNINGS: 07/31/2024 (AMC)
Western Digital Corp. engages in the development, manufacture, marketing, and sale of data storage devices and solutions. It operates through the Flash and Hard Disk Drive segments. The Flash segment represents flash-based data storage devices. The Hard Disk Drive segment provides hard disk storage solutions. The company was founded by Alvin B. Phillips in 1970 and is headquartered in San Jose, CA.
Predefined Scans Triggered: P&F Bullish Catapult, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
WDC is up +0.26% in after hours trading. In this case we have a bullish ascending triangle (flat top, rising bottoms). This implies an upcoming breakout. The RSI is positive and not yet overbought. The PMO just gave us a Crossover BUY Signal. Stochastics are rising again in positive territory. Relative strength for the industry group is excellent and WDC is showing new outperformance against the group and consequently the SPY. The stop is set at the 50-day EMA around 7.9% or $70.12.
The overbought weekly RSI implies the need for caution. The weekly PMO is still on the rise but it is overbought now too. I'd say overall both charts suggest more upside ahead, but a pullback could appear before too long. You'll need to be somewhat nimble on this one.
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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 35% long, 5% 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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