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Reader requests were incredibly light today so I decided to run a few scans. I did manage to find two reader requests and I'm adding one of my own. I will say that the scans were also rather thin so I think we need to be prepared for a possible market top. When scans get scarce results, there is clearly something going on within the broad market that should keep us cautious.
I don't have much more for you today. A quick reminder that tomorrow is the Diamond Mine trading room at Noon ET. It'll be interesting to see what the market brings to us after the jobs report is released.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": CRL, NVP and PTGX.
Other requests: VRNT, TWST and MPW.
My runner-ups: EPRT, MMSI, LANC and ORCL.
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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.
Charles River Laboratorie (CRL)
EARNINGS: 08/07/2024 (BMO)
Charles River Laboratories International, Inc. engages in providing products and services to help pharmaceutical and biotechnology companies. It operates through the following segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions. The RMS segment includes its insourcing solutions business and Charles River accelerator and development lab footprint. The DSA segment offers regulatory-required safety testing of potential new drugs, vaccines, industrial and agricultural chemicals, consumer products, veterinary medicines, and medical devices. The Manufacturing Solutions segment focuses on microbial solutions and biologics solutions. The company was founded by Henry L. Foster in 1947 and is headquartered in Wilmington, MA.
Predefined Scans Triggered: Bullish MACD Crossovers.
CRL is up +1.44% in after hours trading. Today saw a follow through day on a nice reversal rally. There is a bullish falling wedge that dominates the chart and suggests we will see this rally continue. The RSI isn't in positive territory, but it is rising and is not yet overbought. The PMO is about to see a Crossover BUY Signal. Stochastics are rising vertically. Relative strength is picking up for the Biotech group so we'll want to be on the lookout for more of these. CRL is just beginning to see outperformance against the group and the SPY. The stop is set below the last bottom at 7.9% or $204.06.
Price has not tested prior support, but it did test the last low successfully. The weekly RSI is negative and the weekly PMO is still declining on a SELL Signal. It does look like it is beginning to decelerate at least. The StockCharts Technical Rank (SCTR) is rising, but it is far away from the hot zone* above 70. Keep this one with a short-term time horizon until that weekly PMO turns up.
*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.
Novo Nordisk A S (NVO)
EARNINGS: 08/07/2024
Novo Nordisk A/S is a global healthcare company, which engages in the discovery, development, manufacturing and marketing of pharmaceutical products. It operates through the Diabetes and Obesity Care, and Rare Disease segments. The Diabetes and Obesity Care segment includes diabetes, obesity, cardiovascular, and emerging therapy areas. The Rare Disease segment refers to rare blood disorders, rare endocrine disorders, and hormone replacement therapy. The company was founded by Harald Pedersen and Thorvald Pedersen in 1923 is headquartered in Bagsvaerd, Denmark.
Predefined Scans Triggered: New 52-week Highs and P&F Double Top Breakout.
NVO is down -0.01% in after hours trading. The biggest problem with the chart is that the RSI is overbought and could use some relief. However, I do note that back in February it was able to easily handle overbought conditions. This is a nice breakout. The PMO recently surged above the signal line well above the zero line. Stochastics are above 80 and relative strength is improving for both the group and NVO. The stop is set at the last bottom at 7.8% or $131.29.
I definitely like this breakout on the weekly chart. As with the daily chart, overbought conditions on the RSI would be the only problem and as with the daily chart, overbought conditions can persist on this stock. The weekly PMO has turned up and is nearing a Crossover BUY Signal. The SCTR is near the top of the hot zone. This one looks good in the intermediate and short terms. Consider a 17% upside target to about $166.61.
Protagonist Therapeutics, Inc. (PTGX)
EARNINGS: 08/01/2024 (AMC)
Protagonist Therapeutics, Inc. a clinical-stage biopharmaceutical company, which engages in discovering and developing peptide-based therapeutic drugs to address unmet medical needs. Its product pipeline includes PTG-300, PTG-200, and PN-943. The company was founded by Mark L. Smythe on August 22, 2006 and is headquartered in Newark, CA.
Predefined Scans Triggered: New 52-week Highs, Hollow Red Candles and P&F Double Top Breakout.
PTGX is up +1.41% in after hours trading. I liked today's pause after the big rally yesterday. It sets it up for some follow through. The RSI is getting overbought, but is still safe for now. The PMO is rising after a Crossover BUY Signal above the zero line. Stochastics are rising and are near 80. As noted earlier, the Biotech group is beginning to outperform. PTGX is showing leadership among the group and is also outperforming the market. The stop was set below the prior top at 7.3% or $31.53.
The weekly chart is strong. This breakout comes out of a bull flag. If the pattern is correct, the minimum upside target would take price past the 2021 top. The weekly RSI is positive and there is a new weekly PMO Crossover BUY Signal. The SCTR is at the top of the hot zone. If it can get to that 2021 top it would be a 50% move. Not so sure it will make it there, but certainly the stage is set for good returns.
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