Welcome to this week's "Diamonds in the Rough". Due to the market holiday on Thursday for July 4th, I will be adjusting our Diamonds schedule to accommodate.
Today you'll get four "Diamonds in the Rough", Tuesday you'll get three ETFs and Wednesday will be Reader Request Day so get your symbol requests in early!
Last Friday we noted that Coal was ready to break out and named it our Industry Group to Watch. Today Coal stocks exploded higher and I see more upside ahead so I have included a Coal stock today.
Financials had a good showing in today's scans so I have two choices from that sector. Finally I found a Healthcare Provider with potential. The group isn't wowing right now, but the chart suggests we will get some good upside.
I opted to sell my positions in NVDA today so I'm sure it will reignite its rally. I opted to sell into strength as I don't like the intermediate-term picture for it right now. I am not making any recommendations here, just updating you.
Again, get those Reader Requests in early!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BGC, PJT, SEM and SXC.
Runner-ups: WT, PLMR, CPRX, MMSI, WFC, WRLD and BTU.
RECORDING & DOWNLOAD LINK (6/28/2024):
Topic: DecisionPoint Diamond Mine (6/28/2024) LIVE Trading Room
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When: July 5, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (7/5/2024) 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.
BGC Group Inc (BGC)
EARNINGS: 07/31/2024 (BMO)
BGC Group, Inc. engages in the provision of brokerage and financial technology services. It offers trade execution and broker-dealer services specializing in Fixed Income (Rates and Credit), Foreign Exchange, Equities, Energy and Commodities, Shipping, and Futures. The company was founded on April 19, 2021 and is headquartered in New York, NY.
Predefined Scans Triggered: P&F Double Top Breakout.
BGC is up +0.12% in after hours trading. I didn't annotate it, but I do see a short-term reverse head and shoulder pattern leading into the breakout. The pattern suggests we will see a breakout at the next level of overhead resistance. The RSI is positive and not at all overbought. The PMO is about to trigger a Crossover BUY Signal. We saw a small spike in volume leading into the rally. Stochastics are above 80. Relative strength is picking up for the industry group and BGC is already showing outperformance. The stop is set as close to support as I could comfortably get it at 7.1% or $7.87. This is low priced so position size wisely.
We see a rising trend out of the 2022 low, but the weekly PMO doesn't look particularly good as price has been in a declining trend of late. I'm not overly concerned given the positive RSI and the strong StockCharts Technical Rank (SCTR) which is reading in the hot zone*. Consider a 17% upside target to about $9.92.
*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.
PJT Partners Inc. (PJT)
EARNINGS: 07/23/2024 (BMO)
PJT Partners, Inc. is a holding company, which engages in the provision of advisory-investment solutions. It specializes in strategic advisory, shareholder engagement, restructuring and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors, and governments. It operates through International and Domestic segments. The company was founded on November 5, 2014 and is headquartered in New York, NY.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
PJT is up +0.24% in after hours trading. I liked today's breakout on the chart that essentially busted the short-term double top that was developing. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal above the zero line. I wouldn't liked to have seen a breakout on the OBV, but it is close. Stochastics are rising above 80. Relative strength is starting to build for the industry group and PJT is already outperforming it and the SPY. The stop is set beneath the last low at 6.7% or $102.84.
The breakout from a consolidation zone looks good. The weekly RSI is not yet overbought and the weekly PMO is on a new Crossover BUY Signal. We even have a SCTR that is in the hot zone. Consider a 17% upside target to $128.97.
Select Medical Holdings Corp. (SEM)
EARNINGS: 08/01/2024 (AMC)
Select Medical Holdings Corp. engages in the provision of medical rehabilitation services. It operates through the following business segments: Critical Illness Recovery Hospital, Rehabilitation Hospital, Outpatient Rehabilitation and Concentra. The Critical Illness Recovery Hospital segment serves patients with debilitating injuries and rehabilitation needs that cannot be adequately cared for in a medically intensive environment, such as a skilled nursing facility. The Rehabilitation Hospital segment provides physical medicine, as well as rehabilitation programs and services, which serve to optimize patient health, function, and quality of life. The Outpatient Rehabilitation segment offers physical, occupational, and speech rehabilitation services through its clinics. The Concentra segment operates through its medical centers and contract services provided at employer worksites and Department of Veterans Affairs community-based outpatient clinics, which deliver occupational medicine, physical therapy, veteran's healthcare, and consumer health services. The company was founded by Robert A. Ortenzio and Rocco A. Ortenzio in 1996 and is headquartered in Mechanicsburg, PA.
Predefined Scans Triggered: Moved Above Upper Bollinger Band and P&F Double Top Breakout.
SEM is up +0.06% in after hours trading. The breakout caught my eye combined with the very high PMO value. The RSI is positive and not overbought. There is a nearing PMO Crossover BUY Signal well above the zero line. I would have liked to have seen an OBV breakout, but it is digesting the high volume decline from Friday. Stochastics are above 80. The industry group is performing in line with the SPY which works for me. Relative strength lines are angling higher for SEM to the SPY and its industry group. The stop is set at support at 7.9% or $32.74.
The breakout looks very good on the weekly chart. It is breaking out of that consolidation zone that it has been in since early 2022. The weekly RSI is positive and not quite overbought yet. The weekly PMO is rising strongly and the SCTR is in the hot zone. We have nice upside potential should it reach the 2021 high.
SunCoke Energy Inc. (SXC)
EARNINGS: 08/01/2024 (BMO)
SunCoke Energy, Inc. engages in the production of coke through heating metallurgical coal in a refractory oven. It operates through the following segments: Domestic Coke, Brazil Coke, and Logistics. The Domestic Coke segment consists of the Jewell facility located in Vansant, Virginia, the Indiana Harbor facility located in East Chicago, Indiana, the Haverhill facility located in Franklin Furnace, Ohio, the Granite City facility located in Granite City, Illinois and the Middletown facility located in Middletown, Ohio. The Brazil Coke segment focuses on the operations in Vit'ria, Brazil. The Logistics segment refers to the CMT, KRT, and Lake Terminal, which provide services to the Indiana Harbor coke making facility and DRT, which involves services to the Jewell coke making facility. The company was founded in December 2010 and is headquartered in Lisle, IL.
Predefined Scans Triggered: None.
SXC is up +0.05% in after hours trading. While it didn't explode like ARCH or BTU, it did rally strongly out of a bullish double bottom pattern. It has plenty of upside available to it and isn't overbought yet. The RSI is just now moving into positive territory and there is a new PMO Crossover BUY Signal. Stochastics are rising strongly. We can see the industry group starting to outperform. SXC is showing some leadership within the group based on relative strength and it is also outperforming the SPY. The stop is set beneath support at 7.5% or $9.27.
Price does look toppy on the weekly chart so we should keep this in the short-term timeframe for now. The weekly RSI is almost in positive territory and we do see the weekly PMO turning back up. We need to get price back above this area of resistance. The SCTR is not in the hot zone, but it is rising. Consider a 17% upside target to around $11.73. (Full disclosure: I own SXC.)
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 40% long, 0% short. I own SXC.
I'm required to disclose if I currently own a stock I mention and/or may buy/short it within the next 72 hours.
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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)
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