I will sometimes talk about "boom or bust" stocks. These are stocks with tremendous upside potential but also carry a lot of downside risk. They will either take off or they will bust. Two of today's reader requests fall into that category in my opinion. One more than the other, but still they both have prospects of big gains.
If you are going to go in on one of those type of stocks just understand the downside risk and decide if you have an appetite for it.
I would like to see more requests come in so don't forget you can send any symbols that are on your mind for possible inclusion on Thursdays. If I have time I will often get back to you with my outlook on the symbol you provide even if I don't cover it.
Tomorrow is the Diamond Mine trading room. Hope to see you there! We have a great time!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EXR, MARA and OCUL.
Other requests: BGC, TSEM, COGT, ASB, VCEL, WMS and TSN.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (8/16/2024):
Topic: DecisionPoint Diamond Mine (8/16/2024) LIVE Trading Room
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Passcode: August#16
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When: August 23, 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 8/19. 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.
Extra Space Storage Inc. (EXR)
EARNINGS: 2024-11-05 (AMC)
Extra Space Storage, Inc. is a real estate investment trust. It operates through the following segments: Self-Storage Operations and Tenant Reinsurance. The Self-Storage Operations segment includes rental operations of wholly-owned stores. The Tenant Reinsurance segment includes reinsurance of risks relating to the loss of goods stored by tenants in stores. The company was founded by Kenneth Musser Woolley on April 30, 2004, and is headquartered in Salt Lake City, UT.
Predefined Scans Triggered: Stocks in a New Uptrend (Aroon), P&F Double Top Breakout, Moved Above Upper Keltner Channel and New 52-week Highs.
EXR is up +0.41% in after hours trading. Today's breakout got me on this one. The rally is strong. This has unfortunately moved the RSI close to overbought territory but I think we will continue to see followthrough given the breakout. It is coming out of a rounded bottom base as well. The PMO is on a Crossover BUY Signal and Stochastics have taken up residence above 80. Relative strength for the group is beginning to pick up again. EXR shows excellent relative strength against the group and the SPY. I've set the stop below support at 7.8% or $160.15.
This looks like a bullish reverse head and shoulders on the weekly chart and it has executed with this breakout above the neckline. The weekly RSI is overbought, but we've seen it hold those conditions before. The weekly PMO is accelerating higher and the StockCharts Technical Rank (SCTR) is in the hot zone*. The head and shoulders implies a move that would take price past 2022 highs.
*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.
Marathon Digital Holdings Inc (MARA)
EARNINGS: 2024-11-07 (AMC)
Marathon Digital Holdings, Inc. is a digital asset technology company, which engages in mining cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets. The company was founded on February 23, 2010 and is headquartered in Las Vegas, NV.
Predefined Scans Triggered: Elder Bar Turned Blue.
MARA is up +0.94% in after hours trading. This is a nice rally off strong support. This trade also takes advantage of what I see as new strength for Bitcoin coming in. This is also the giant 'boom or bust' stock I have for you today. Today's big decline is just a taste of what you may have to endure with a stock like this. Get out the Tums. Price is holding below resistance currently, but the chart is beginning to shape up. The RSI is negative, but that means it isn't overbought. The PMO is nearing a Crossover BUY Signal despite today's decline. Stochastics are also rising strongly in spite of the decline as well. Relative strength is picking up for the group near-term and MARA is performing well against the group and SPY. The stop has to be set deep and even then it isn't that close to support. I've set it at 7.9% or $15.52.
The weekly chart needs help so keep this one on a tight leash in the short term for now. I'd probably do that anyway given it is a boom or bust stock. Speaking of 'boom', check out the upside possibilities if it only were to reach the last high! The weekly RSI is negative though and the weekly PMO in decline for now. The SCTR looks terrible. This is a higher risk play than what I usually provide in Diamonds.
Ocular Therapeutix Inc. (OCUL)
EARNINGS: 2024-11-11 (BMO)
Ocular Therapeutix, Inc. is a biopharmaceutical company, which engages in the development and commercialization of therapies for diseases and conditions of the eye. Its product pipeline includes Dextenza, OTX-TP, and OTX-TIC. The company was founded by Amarpreet S. Sawhney and Farhad Khosravi on September 12, 2006 and is headquartered in Bedford, MA.
Predefined Scans Triggered: Stocks in a New Uptrend (Aroon), P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
OCUL is up a whopping +4.7% in after hours trading. I have no idea what that is about. Price broke out yesterday and then had a mechanical pullback to new support. That is a good setup. The RSI is not overbought and the PMO is on a new Crossover BUY Signal. Pharma is starting to pick up relative strength and OCUL is already showing strength and has held that strength for some time. This is a bit of a boom or bust stock which is why the stop can't get close to any real support levels. At this point I did set it around the 20-day EMA at 7.7% or $8.25.
The 'boom' isn't nearly what it was on MARA, but if it breaks out, there really is no overhead resistance to hold it back. The weekly RSI is positive and not overbought. The weekly PMO is on a Crossover BUY Signal and the SCTR is in the hot zone.
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 45% 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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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