Welcome to a new week of "Diamonds in the Rough"! I did have a decent amount of scan results today and one of the stocks provided was one that I mentioned on Friday as part of the Industry Group to Watch. We dove into the group and this one came up. Today it came up in the scans.
I have a Semiconductor for you today. It appears to be outperforming its brethren and could offer some nice exposure if you aren't already in NVDA or another Semiconductor. I'd be careful loading up in one industry group.
The other two selections were interesting. The one problem with them is that their industry groups aren't performing very well. But, as I often have said, I don't pick primarily on relative strength and as long as the stock or ETF is outperforming the SPY, the rest is okay.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GDDY, GNRC, ONTO and TNDM.
Runner-ups: RCL, CCL, CGNX, CWK, ATI, ST, GS and IAC.
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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.
GoDaddy Inc. (GDDY)
EARNINGS: 2024-08-01 (AMC)
GoDaddy, Inc. engages in the provision of simple and easy-to-use products on a single technology platform wrapped with personalized guidance. It operates under the Applications and Commerce (A and C) and Core Platform (Core) segments. The A and C segment includes selling products containing proprietary software, commerce products, third-party email, productivity solutions, and certain products included in bundled offerings of proprietary software products. The Core segment includes domain registrations and renewals, aftermarket domain sales, website hosting products, website security products not included in bundled offerings of proprietary software, and products that do not contain a software component. The company was founded by Robert R. Parsons in 1997 and is headquartered in Tempe, AZ.
Predefined Scans Triggered: Elder Bar Turned Green, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
GDDY is unchanged in after-hours trading. Price spent about a month consolidating but now it has broken out. The RSI is not yet overbought and the PMO just triggered a Crossover BUY Signal. Stochastics are holding above 80 and are rising. If I had a complaint, it would be that the OBV hasn't overcome its prior top, but that is due to the heavy selling last month. Relative strength is muted against the group, but it is outperforming the SPY and that is most important. The group is showing relative strength and we already know the sector is doing well. I've set the stop beneath support at 7.3% or $133.84.
The weekly chart is mixed. The weekly PMO has topped so that is the most negative part of the chart. The weekly RSI is also overbought (although that is less worrisome given it has held that condition for months). The StockCharts Technical Rank (SCTR) is at the top of the hot zone* above 70. I like its chances moving forward. Consider a 17% upside target to about $168.93.
*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.
Generac Holdings Inc. (GNRC)
EARNINGS: 2024-07-31 (BMO)
Generac Holdings, Inc. engages in the business of designing and manufacturing energy technology solutions. It operates under the Domestic and International segments. The Domestic segment includes the legacy Generac business and the acquisitions that are based in the United States and Canada. The International segment focuses on Generac business' Latin American export operations. The company was founded in 1959 and is headquartered in Waukesha, WI.
Predefined Scans Triggered: P&F Double Top Breakout.
GNRC is up +0.76% in after-hours trading. I note a short-term bullish double bottom on the chart. Price got above the confirmation line at the middle of the "W". The height of the pattern would put price around $150, but I think if it gets to that level it will continue to move toward overhead resistance. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal. The OBV is confirming the rally and Stochastics are rising above 80. The industry group isn't doing well right now, no denying it. However, GNRC is holding its own against the SPY and the group. I've set the stop below the double bottom at 8% or $131.48.
The weekly chart is quite favorable. The weekly RSI is not overbought. The weekly PMO is surging above the signal line (bottoming above the signal line) and the SCTR is inside the hot zone. If it can overcome the next level of resistance, there is plenty of upside potential.
Onto Innovation Inc (ONTO)
EARNINGS: 2024-08-08 (AMC)
Onto Innovation, Inc. engages in the business of designing, developing, manufacturing, and supporting high-performance control metrology, defect inspection, lithography, and data analysis systems used by microelectronics device manufacturers. The firm is also involved in providing process and yield management solutions used in bare silicon wafer production and wafer processing facilities. The company was founded in 1940 and is headquartered in Wilmington, MA.
Predefined Scans Triggered: P&F Double Top Breakout, New 52-week Highs, Stocks in a New Uptrend (ADX) and P&F Spread Triple Top Breakout.
ONTO is up +0.35% in after-hours trading. It hasn't broken out yet, but given the indicators, it should. The RSI is positive and not at all overbought. There is a new PMO Crossover BUY Signal and Stochastics are above 80. Relative strength is rising for the group still and ONTO is outperforming it and the market. Semiconductors are mostly overbought, but according to the RSI this one isn't. The stop is set at the 50-day EMA at 7.5% or $216.93.
Price is holding above support and has broken the declining trend this week. The weekly RSI is getting overbought which could be a problem. The weekly PMO has turned up and is moving toward a Crossover BUY Signal. The SCTR is at the top of the hot zone. Consider a 17% upside target to about $274.39.
Tandem Diabetes Care, Inc. (TNDM)
EARNINGS: 2024-08-01 (AMC)
Tandem Diabetes Care, Inc. engages in the design, development, and commercialization of products for people with insulin-dependent diabetes. Its products include Tandem Mobi System and t:slim X2 Insulin Pump. The company was founded by Paul M. DiPerna on January 27, 2006, and is headquartered in San Diego, CA.
Predefined Scans Triggered: Bullish MACD Crossovers.
TNDM is down -0.19% in after-hours trading. I really like the turn that TNDM is making on top of gap support. Price has now overcome both the 20/50-day EMAs. This prevent a "Dark Cross" of those two EMAs. The RSI is rising and is far from overbought. Stochastics are rising vertically toward 80. The industry group isn't doing very well, but TNDM is beating the SPY right now and is showing leadership within the group. I've set the stop as close to support as I could without making it too deep. I've set it at 7.8% or $39.62.
The weekly chart looks pretty good. Price is holding a long-term rising trend out of the 2023 low. The weekly RSI is positive, rising and not overbought. The weekly PMO is beginning to surge above the signal line. The SCTR is at the top of the hot zone above 70. If it can get to overhead resistance it would be an excellent return.
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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)
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Here is the current chart:
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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.
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