The market rallied to a new all-time high and consequently the scans were full of growth ETFs. Today's Diamonds in the Rough will be following the theme. One of the other themes that I won't be presenting was Municipal Bonds. Upside potential is limited in this area.
I will note that I have put as runner-ups the 3x bull funds for Technology (TECL) and Semiconductors (SOXL). These would be very short-term trades that would need to be monitored closely. I opted to be less aggressive in my selections, but I do see both of these as offering some excellent profits in the near term.
The first of the jobs reports will be released tomorrow and this could sweeten the market. The market rally seems sturdy so I believe it will withstand a mediocre report. I would continue to apply stops for protection just in case.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ARKG, FBCG and IXN.
Runner-ups: BBEU, ITA, SOXL and TECL.
Full disclosure: I purchased yesterday's Diamond in the Rough, Raytheon (RTX). I apologize for not letting you know it was on my radar yesterday.
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Topic: DecisionPoint Diamond Mine (6/7/2024) LIVE Trading Room
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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.
ARK Genomic Revolution Multi-Sector ETF (ARKG)
EARNINGS: N/A
ARKG is an actively managed fund that targets companies involved in the genomics industry. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green and Bullish MACD Crossovers.
ARKG is down -0.79% in after hours trading. This is less Technology and more Healthcare, but I couldn't resist the bullish cup with handle pattern that was confirmed with today's stellar rally. The RSI is back in positive territory. I'm noticing an OBV positive divergence with recent price lows that suggests we will see follow through to the upside. The PMO has just triggered a Crossover BUY Signal. Stochastics are rising strongly and this ETF is beginning to show a little outperformance as a bonus. The stop is set below support at 7.8% or $24.41.
There is excellent upside potential given price is at the bottom of a trading channel. I've marked it to the prior tops and it is very good. The weekly RSI isn't positive yet and the StockCharts Technical Rank (SCTR) is in the basement far away from the hot zone*. The weekly PMO is trying to turn up. Keep this in the short-term timeframe.
*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.
Fidelity Blue Chip Growth ETF (FBCG)
EARNINGS: N/A
FBCG is an actively-managed, non-transparent fund of fundamentally-selected global growth stocks. The fund utilizes the Fidelity non-transparent model. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, Parabolic SAR Buy Signals and P&F Double Top Breakout.
FBCG is up +2.45% in after hours trading. The one issue is that the RSI is now overbought, but this fund is made up of the stocks that have been and likely will be carrying the market to new heights. I thought this was an excellent way to take advantage of growth opportunities. The PMO has surged above the signal line well above the zero line. The OBV is rising and confirming the rally. Stochastics have returned to territory above 80. It is a clearly a top performer as it is made up of the market catalysts. I've set the stop at the 50-day EMA at 6.4% or $38.61.
Overbought conditions are a problem in the intermediate term as well, but we can see that overbought conditions can persist in a bull market. The weekly PMO is on a Crossover BUY Signal well above the zero line. The SCTR is at the top of the hot zone. Consider a 17% upside target to about $48.27.
iShares Global Tech ETF (IXN)
EARNINGS: N/A
IXN tracks a market cap-weighted index of global technology stocks. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, Improving Chaikin Money Flow, New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Price Channel, Parabolic SAR Buy Signals, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
IXN is down -0.04% in after hours trading. This ETF covers the big tech names in growth. We have a very nice breakout to new all-time highs. The RSI isn't overbought yet. The PMO has surged above the signal line. Stochastics are rising after reversing in positive territory. You could even make a case for a bull flag formation. The stop is set beneath the 50-day EMA and the prior low at 6.2% or $74.36.
The weekly chart is very strong. The weekly RSI is positive and not yet overbought. The weekly PMO is going in for a Crossover BUY Signal and the SCTR is already at the top of the hot zone. Consider a 17% upside target to about $92.75.
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 50% 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)
For more links, go to DecisionPoint.com