Today I only had one person turn in symbols for Reader Request Day. Since he sent in four, I went with three of them. He has a good eye for charts as I like the setups.
Don't hesitate to email me symbols. They can be from your own portfolio or simply a chart you have a question on. You can also send them in all during the week before Thursday at 1p PT.
We saw a strong rally today but I have a feeling this might be a final push rather than a new leg up so watch your exposure and set those stops.
One of today's selections I would list as "boom or bust" as it is very volatile and offers great upside potential, but that is accompanied by a lot of downside risk. I had to set the stop over 10%. I know there are some risk takers out there. Just make sure you are prepared for a possible slide.
The other two are from the Technology sector and while I really don't like this area of the market due to downside risk, these are two very nice charts that could buck the trend. In a way they could be considered hedges in case we're wrong about this being the beginning of a bear market.
Don't forget to register for tomorrow's Diamond Mine trading room. Tomorrow promises to be an interesting day as we see if this rally will get legs or whether it will fall on its face.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ACB, CRCT and SWI.
Other request: CF.
Diamond Mine Trading Room:
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Topic: DecisionPoint Diamond Mine (8/2/2024) LIVE Trading Room
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When: August 9, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine LIVE Trading Room
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Below is the latest free DecisionPoint Trading Room recording from 8/5. You'll find these recordings posted on Mondays to our DP YouTube Channel. Be sure and subscribe HERE.
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.
Aurora Cannabis Inc. (ACB)
EARNINGS: 2024-08-07 (BMO)
Aurora Cannabis, Inc. engages in the production, distribution, and sale of cannabis and cannabis-derivative products. It operates through the Cannabis and Plant Propagation segments. The company was founded by Terry Booth and Steve Dobler on December 21, 2006 and is headquartered in Edmonton, Canada.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud, Moved Above Upper Price Channel, P&F Low Pole and Moved Above Upper Keltner Channel.
ACB is up +0.43% in after hours trading. It was an incredible breakout today that begs for followthrough, but this is today's "boom or bust" stock. It could see volatile trading in both directions, but this looks like a solid breakout. The RSI is not yet overbought even with today's 12%+ move. The PMO is rising on a Crossover BUY Signal and Stochastics are almost above 80. Relative strength is powerful, but I do note it has relative strength highs meaning it could see a reversal here. The stop needs to be set deeply given today's huge rally. I've set it beneath support at 10.7% or $6.29.
Here's the "boom" part of the equation. Upside potential to the next level of strong support is over 60%. The weekly RSI is not yet overbought and the weekly PMO is on the rise on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is at the top of the hot zone* above 70. I also note that we have a giant bullish engulfing candlestick based on the open and close for this current week.
*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.
Cricut Inc. (CRCT)
EARNINGS: 2024-11-05 (AMC)
Cricut, Inc., distributes scrap book, craft and home decor items. The firm's products include its flagship line of cutting machines, such as the Cricut Maker family, the Cricut Explore family, and Cricut Joy, accompanied by other tools like Cricut EasyPress, the Infusible Ink system, and a diverse collection of materials. It operates through the following segments: Connected Machines, Subscriptions, and Accessories & Materials. The company was founded by Robert Workman in June 1969 and is headquartered in South Jordan, UT.
Predefined Scans Triggered: None.
CRCT is down -0.31% in after hours trading. Today saw a breakout above the 200-day EMA. I also spotted a reverse head and shoulders pattern with a down sloping neckline. Price has broken that neckline, confirming the bullish pattern. The RSI is not overbought and the PMO is rising on a new Crossover BUY Signal. Stochastics are rising strongly. The industry group isn't doing well so that could cause some problems, but for now CRCT is showing nice outperformance against the SPY. I've set the stop at the 20/50-day EMAs at 8% or $5.98.
I see a bullish cup with handle pattern on the weekly chart. Price is trying to pop through overhead resistance right now. The weekly RSI is positive and not overbought. The weekly PMO is about to vault the zero line on a Crossover BUY Signal. The SCTR is in the hot zone. If it can get to this year's high it would be an over 33% gain.
Solarwinds Corporation (SWI)
EARNINGS: 2024-10-31 (BMO)
SolarWinds Corp. engages in providing information technology (IT) infrastructure management software. Its products include observability, network management, systems management, database management, IT service management, application management, and IT security. The company was founded in 1999 and is headquartered in Austin, TX.
Predefined Scans Triggered: Improving Chaikin Money Flow, P&F Ascending Triple Top Breakout, P&F Double Top Breakout, Strong Volume Gainers and New 52-week Highs.
SWI is up +3.04% in after hours trading. We saw excellent followthrough on yesterday's breakaway gap. Price is now out of a longer-term trading range and appears ready to start a new one. The RSI is not overbought despite this strong rally. The PMO is on a new Crossover BUY Signal and Stochastics are almost above 80 and rising. This is another one where the group isn't doing very well but with this breakaway rally SWI bumped up its relative strength. The stop is set about halfway down the prior trading range at 7.2% or $11.92.
We have a giant bullish engulfing candlestick on the weekly chart right now. It engulfed nearly all of the trading range before it. This is a breakout above resistance. The weekly RSI is not overbought yet and the weekly PMO has turned up well above the zero line. The SCTR is in the hot zone. I think we could see a breakout at the next level of overhead resistance, but 17.7% is a good gain if it reaches resistance.
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 20% 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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Watch the latest episode of DecisionPoint Trading Room with Carl & Erin Swenlin Mondays on the DecisionPoint YouTube channel here!
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