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It was not a successful day for the ETF scans. I did see one theme that was prominent and that was Bond funds, everything from TIPS to municipal bonds and corporate bond funds. I think upside potential is limited in this area, but it is something to keep in mind as a way to diversify.
I found an interesting ETF that I wish I'd found much earlier. There are some ETFs that are centered around mega-caps. The Mega-Cap Value ETF came up on the scans, but I knew value was not where we wanted to be. I found the growth version of the ETF. The one problem is that it is majorly overbought for good reason. This is the place where the market is clicking and overbought conditions can persist in a strong bull market move for a stock or ETF.
I saw a few international ETFs come through. The South Africa ETF (EZA) was up over 5% today and it does look good, I just am not interested in chasing it. I found the Switzerland ETF (EWL) looked favorable enough to present.
Finally the last ETF I'm presenting is one that is falling off the spreadsheet this week. I felt it looked very promising and should remain on the list so I'm presenting it again. It is associated with the AI craze.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EWL, MGK and WTAI.
Runner-ups: EZA, MGV, KIE and PHO.
RECORDING & DOWNLOAD LINK (6/14/2024):
Topic: DecisionPoint Diamond Mine (6/14/2024) LIVE Trading Room
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When: Jun 21, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/21/2024) LIVE Trading Room
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Here is the latest recording from 6/17. 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 MSCI Switzerland Capped ETF (EWL)
EARNINGS: N/A
EWL tracks a market-cap-weighted index of Swiss stocks. It captures 85% of the publicly available market, excluding small-caps. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green and P&F Double Top Breakout.
EWL is up +0.06% in after hours trading. I spotted a bull flag formation that would imply more upside on today's breakout move to confirm the pattern. The RSI is positive and not at all overbought. The PMO surged above the signal line today. Stochastics aren't that exciting, but they are trending higher in positive territory. Unfortunately it hasn't been performing very well against the SPY, but it was one of the few ETFs with promise. The stop is set below the 200-day EMA, but I wouldn't hesitate to drop the ETF if it dropped much below the 50-day EMA. I've set it at 7.1% or $45.76.
We can see that strong overhead resistance is nearing at the 2022 top, but the indicators are set up well enough to get a breakout here. The weekly RSI is positive and not overbought. The weekly PMO is on a Crossover BUY Signal above the zero line and the StockCharts Technical Rank (SCTR) just entered the hot zone*. Consider a 17% upside target to $57.63.
*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.
Vanguard Mega Cap Growth ETF (MGK)
EARNINGS: N/A
The fund tracks an index of mega-cap stocks in the US. Holdings are selected and weighed based on growth factors. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Blue and P&F Double Top Breakout.
MGK is down -0.22% in after hours trading. This is not a chart I would normally bring out, but given the market is running on these mega-cap stocks, we should include them in our portfolios. This ETF offers a way to do that without buying each of the top 10 holdings. The rally is strong and isn't really parabolic. As overbought as the RSI is, it can maintain that level. The PMO is rising strongly well above the zero line. The OBV is confirming the rally and Stochastics are camped out above 80. Relative strength is clearly not a problem. This is likely a winner that will keep on winning until the market finally turns over. These guys will lead the way down so pay attention to this ETF. The stop is set beneath support at 7.9% or $291.20.
It is no surprise that the weekly RSI is also overbought. The weekly PMO just gave us a Crossover BUY Signal so it suggests more upside potential. The SCTR is at the top of the hot zone. Consider a 17% upside target to about $369.93.
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: Moved Above Upper Keltner Channel.
WTAI is down -0.05% in after hours trading. We have a nice breakout above the May top. The RSI is positive and not overbought even with the rally. The PMO is on a Crossover BUY Signal and is traveling above the zero line. Stochastics are above 80. I like the theme of this ETF but granted it does overlap somewhat with MGK. Relative strength has been rising against the SPY. I've set the stop just below the 200-day EMA at 7.3% or $19.51.
This bounce is coming off strong support. The weekly RSI is positive, rising and not overbought. The weekly PMO just turned back up and the SCTR is nearly in the hot zone. If it can regain its former glory it would be an excellent gain.
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 48% 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