It is ETF Day and I have three selected that look very good moving forward. The scans produced quite a few results but they were mostly centered around two themes. What were they?
First, with the market moving in the right direction I found that small-caps were a prevalent theme so I selected a growth ETF for small-caps.
Second, the Bitcoin ETFs came up as well as a newer ETF that I wasn't familiar with, Bitcoin Miners (WGMI). I opted to present that one, but also be aware that Bitcoin itself is looking more bullish.
The third choice today also is related to Bitcoin, the Digital Transformation ETF (DAPP) which should also be a good choice to take advantage of new strength in Bitcoin. It is very similar to WGMI.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DAPP, IWO and WGMI.
Runner-ups: XHB, IWM, IJT, BITB and CALF.
Diamond Mine Trading Room:
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Topic: DecisionPoint Diamond Mine (8/16/2024) LIVE Trading Room
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Topic: DecisionPoint Diamond Mine 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.
VanEck Vectors Digital Transformation ETF (DAPP)
EARNINGS: N/A
DAPP tracks a market-cap-weighted index of global innovative companies that are involved in the digitalization of the world's economy through a diverse range of digital assets. Click HERE for more information.
Predefined Scans Triggered: None.
DAPP is up +0.52% in after hours trading. I like this reversal after a successful test of support that formed a bullish hollow red candlestick. Price is now above the 50-day EMA and looks poised to move even higher. The RSI is not at all overbought and the PMO is nearing a Crossover BUY Signal. Stochastics are rising strongly. We even see new outperformance against the SPY. I have set the stop halfway between the 50/200-day EMAs at 7.8% or $10.68.
We have a broad basing pattern on the weekly chart that implies we will see more upside. We could even look at the last decline as a 'handle' on a cup with handle pattern which is bullish. The weekly PMO is a problem right now but that is a function of the prior deep decline. The weekly RSI is positive and not overbought and the StockCharts Technical Rank (SCTR) is at the top of the hot zone*. It would be a nice gain if it can get back to the 2024 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.
iShares Russell 2000 Growth ETF (IWO)
EARNINGS: N/A
IWO tracks an index of US small-cap growth stocks, selected from those ranked 1001-3000 by market-cap based on growth factors. Click HERE for more information.
Predefined Scans Triggered: None.
IWO is down -0.09% in after hours trading. We have a nice breakout from a prior trading range and it is headed back up toward prior highs. The RSI is not overbought despite the lengthy rally and there is a new PMO Crossover BUY Signal. Stochastics are almost above 80. We can see volume coming in and relative strength is starting to show improvement. We should get followthrough. The stop is set beneath support at 7.9% or $254.89.
It appears it is ready to resume the 2021 trading range after the breakout from the prior range. The weekly RSI is positive and the weekly PMO has turned up on a Crossover BUY Signal. The SCTR is not yet in the hot zone, but is at least headed in that direction. It would be a nice profit should it get to the top of the current trading range.
Valkyrie Bitcoin Miners ETF (WGMI)
EARNINGS: N/A
WGMI provides active exposure to companies that derive at least 50% of their revenue from bitcoin mining operations and/or services related to bitcoin mining. Click HERE for more information.
Predefined Scans Triggered: P&F Double Top Breakout.
WGMI is down -0.51% in after hours trading. This is a nice reversal off support at the 200-day EMA. It has gotten above the 20-day EMA and is headed to a move above the 50-day EMA. The RSI just moved into positive territory and the PMO is rising toward a Crossover BUY Signal. Volume is coming in based on the jump in the OBV. Stochastics are rising strongly and relative strength is beginning to pick up. The stop is set as close to the 200-day EMA as I could get at 7.8% or $17.97.
We do have a slight move above the 2023 top that looks encouraging. The weekly RSI is not overbought and is in positive territory. The weekly PMO was damaged greatly by the prior decline as was the SCTR. The SCTR is at least improving. We'll have to wait on the weekly PMO. It would be a hefty profit if it can capture the prior high.
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