There were a few themes that came through on today's scans. One was Bond funds which are seeing some action on yields moving lower today. I do expect that they will continue lower a bit longer based on the inflation data we got today so Bonds aren't a bad hideout for a little bit. We will likely only see one rate cut this year if they are serious about bringing down inflation. Carl and I think they should forego them altogether. We wouldn't be surprised if a cut arrives conveniently before the election.
Growth continued to be a theme with growth related funds seeing strength on today's rally. This was a pretty nice recovery today so I do see some potential. I opted to pick three growth areas of the market for today's ETF selections.
Another theme was Real Estate and Oil & Gas. Real Estate got a boost from yields moving lower and on the expectation that they will continue lower from here. It'll probably be a good trade moving forward, I just believe there will be better areas to concentrate on.
Crude Oil is rallying and the scans picked up Oil Equipment & Services ETFs as well as USO and BNO. I think the Energy trade is going to finally amount to something, but I opted not to present any today.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BUG, IGV and QCLN.
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Topic: DecisionPoint Diamond Mine (6/14/2024) LIVE Trading Room
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Here is the latest recording from 6/10. 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.
Global X Cybersecurity ETF (BUG)
EARNINGS: N/A
BUG tracks a modified market-cap-weighted global index of companies selected on the basis of revenue related to cybersecurity activities. Click HERE for more information.
Predefined Scans Triggered: Bullish MACD Crossovers and Filled Black Candles.
BUG is unchanged in after hours trading. I was struck by the large bullish double bottom pattern when I saw it in the CandleGlance. Granted today saw a filled black candlestick (implies a down day tomorrow), but given today's upward thrust, we could see upside follow through anyway. The double bottom pattern, if confirmed with a breakout, suggests a minimum upside target that would take price above the February top. The RSI just moved into positive territory and the PMO gave us a Crossover BUY Signal today. I spotted a positive OBV divergence and Stochastics are rising strongly. Relative strength is beginning to pick up. I've set the stop below support at 6.7% or $27.07.
I think you could make a case for an elongated bullish flag formation. The weekly RSI is now in positive territory and the weekly PMO is decelerating and ready to bottom. The StockCharts Technical Rank (SCTR) is rising again, but it is well outside the hot zone* above 70. If it can reach prior all-time highs it would be an over 18.5% gain.
*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.
iShares Expanded Tech-Software Sector ETF (IGV)
EARNINGS: N/A
IGV tracks a market-cap-weighted index of US and Canadian software companies. Click HERE for more information.
Predefined Scans Triggered: Bullish MACD Crossovers and Entered Ichimoku Cloud.
IGV is up +0.25% in after hours trading. We see another double bottom formation which is bullish. We just had a reverse island execute today with the gap up. It left price below in an "island". That implies follow through. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal. There is a small problem of an OBV "reverse divergence". The OBV is higher than its previous top while price is not. This means that price isn't following volume as it should. Still, Stochastics are rising in positive territory and relative strength is picking up. Price should catch up. The stop is listed below support at 7.7% or $76.36.
It's not been the best year so far, but that decline forms the handle on a long-term cup. Of course the handle could protrude more so I'd like to see a breakout from the declining trend. The weekly RSI is back in positive territory and the weekly PMO is about to turn back up. The SCTR may not be in the hot zone, but it is rising strongly. Consider an upside target of 17% to about $96.80.
First Trust NASDAQ Clean Edge Green Energy Fund (QCLN)
EARNINGS: N/A
QCLN tracks a market-cap-weighted index of US-listed firms involved in clean energy. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Filled Black Candles, Parabolic SAR Buy Signals and P&F Double Top Breakout.
QCLN is down -0.45% in after hours trading. We have a possible bull flag formation that was confirmed with today's breakout. It was a bearish filled black candlestick so we could see a decline tomorrow. The RSI is positive and not overbought. The PMO has surged above the signal line well above the zero line. Stochastics are angling lower, but have currently turned back up. This ETF has been outperforming the SPY since the April low. Primarily due to the recent rally in solar. The stop is set beneath the 50-day EMA at 7.7% or $35.24.
I spotted a bullish double bottom on the weekly chart. The weekly RSI is positive and the weekly PMO is on the rise (albeit below the zero line). The SCTR is quickly improving again. If it gets to overhead resistance we could see an almost 17% gain. No reason it couldn't break out from there.
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 "Under the Hood" 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 45% 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