The scans were unanimous in their results with nearly all of them skewed toward shorting the market in general. The other theme I noticed were Bond funds. I didn't see any I liked that much so I didn't include one, but you should go visit your favorite Bond funds right now with interest rates slipping lower in anticipation of rate cuts this month.
So I decided I would provide you some shorting ideas. One thing to note is that these are leveraged ETFs which is typically what you want to do with a hedge. They should be held very short-term and monitored closely. When the market begins to see strength again, you can let up on some of these hedges.
Tomorrow is Reader Request Day and I already anticipate a lack of symbols as there aren't a whole lot to choose from right now. Still, do me the favor of sending some in to make tomorrow interesting. As usual, if I don't get enough choices, I'll add some of my own.
LXFR had a terrible day today and I was honestly surprised given the very bullish chart. Given I put it out there yesterday, I'm pretty certain no one else got caught in the crossfire. The chart still has some merit. I still own it as the stop wasn't quite hit, but another sizable drop and I'll be stopped out.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DRIP, EDZ and WEBS.
Runner-ups: TUR, BSCT, NFLT, QID, REW, SOXS and TECS.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (8/30/2024):
Topic: DecisionPoint Diamond Mine (8/30/2024) LIVE Trading Room
Recording and Download LINK
Passcode: August#30
REGISTRATION for 9/6/2024:
When: September 6, 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 8/26 (No recording 9/2). 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.
Direxion S&P Oil & Gas Exp. & Prod. Bear 2x Shares (DRIP)
EARNINGS: N/A
DRIP provides 2x inverse daily exposure to an equal-weighted index of the largest oil and gas exploration and production companies in the US. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band and New CCI Buy Signals.
DRIP is down -0.17% in after hours trading. I'm very bearish on Crude Oil given OPEC+ has increased production. This will keep price moving down and this ETF will take advantage of that. It was a strong rally higher so we may see some kind of pause here. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal. Stochastics just moved above 80 and relative strength looks good. It is leveraged so I would prefer an even deeper stop, but for now I have it listed below support at 7.7% or $10.64.
I had to move all weekly charts to log scale today to even get a look at price action. We do have a double bottom formation that I didn't annotate. I'm more interested in the rising weekly PMO and positive weekly RSI. Both suggest more upside ahead and as I mentioned earlier Crude production is loosening and that will keep prices low.
*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.
Direxion Daily Emerging Markets Bear 3x Shares (EDZ)
EARNINGS: N/A
EDZ provides 3x inverse exposure to a market-cap-weighted index of companies operating in emerging markets. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles and Hanging Man.
EDZ is unchanged in after hours trading. Granted we have a very bearish candlestick today, but I like this one moving forward. It is a different hedge and maybe you may want one more centered on an inverse of the QQQ or SPX. This is a nice price reversal off support. The RSI is back in positive territory and the PMO just triggered a Crossover BUY Signal. Stochastics are rising strongly and we can see a little bit of outperformance against the SPY. The stop is set deeply as this is leveraged. I've set it as close to prior support as possible at 7.9% or $8.63.
EDZ is still in a long-term declining trend right now, but I do note that the weekly PMO is rising on a Crossover BUY Signal. The weekly RSI is negative, but at least it is rising again. Upside potential to the last top would be quite lucrative if it can get there.
Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS)
EARNINGS: N/A
WEBS provides 3x daily inverse exposure to a market-cap-weighted index of the largest and most liquid U.S. Internet companies. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles and P&F High Pole.
WEBS is unchanged in after hours trading. This is a nice reversal coming before support was reached which is bullish. The scooped bottom also could be looked at as a bullish double bottom. This is an interesting way to hedge mega-cap in the Communication Services and Technology related space. There was a bearish filled black candlestick today so we could see a decline tomorrow. The RSI is just now above net neutral (50) and the PMO is on the rise and nearing a Crossover BUY Signal. Stochastics look very strong and relative strength tells us a hedge is probably a good idea. The stop has to be set deeply as this is leveraged 3x so I set it at 9.7% or $6.19.
The weekly RSI is still negative, but it is rising. The weekly PMO is surging above the signal line (bottom above the signal line). It is at lows and does suggest we will see some follow through toward 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 40% 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