Readers came up empty this Reader Request Day. I didn't receive any requests and one of the regulars lamented that there just wasn't anything out there he'd like to buy. Well, I rolled up my sleeves and scoured the scans to find some candidates today. I am feeling pretty good about the selections, they are on my radar for tomorrow depending on how the market acts. There are also plenty of runner-ups for you to review.
One theme came through and that was Home Builders. Yesterday I mentioned XHB, the Homebuilders ETF so seeing four stocks on the scan results suggested to me I needed to include one. I picked the one with the highest PMO reading which tells us it has relative strength.
The other two selections are what I would call reversal candidates. They're starting to show strength and have lots of upside potential. The weekly chart for both showed rising weekly PMOs and good setups for a rally continuation.
Tomorrow is the Diamond Mine trading room! Don't miss out on all the fun! We have a lively group on Fridays with everyone joining in on the conversation in the chat room. Come join us! Registration information is below.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": PZZA, TOL and VIAV.
Runner-ups: EMBC, JBL, PHM, MHO, CVCO, SHW, OMC, DOV, SO and CB.
Diamond Mine Trading Room:
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Topic: DecisionPoint Diamond Mine (10/11/2024) 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.
Papa Johns Intl, Inc. (PZZA)
EARNINGS: 2024-11-07 (BMO)
Papa John's International, Inc. engages in the operation and franchise of pizza delivery and carryout restaurants. It operates through the following segments: Domestic Company-owned Restaurants, North America Franchising, North America Commissaries, International Operations, and All Others. The Domestic Company-Owned Restaurants segment consists of retail sales of pizza and side items, breadsticks, cheese sticks, chicken poppers and wings, dessert items, and canned and bottled beverages. The North America Franchising segment involves the offering of sales and support activities, development rights, and collection of royalties from franchisees located in the United States and Canada. The North America Commissaries segment includes the eleven full-service regional dough production and distribution and quality control centers. The International Operations segment represents all restaurant operations outside of the United States and Canada. The All Others segment focuses on franchise contributions to marketing funds and sale, company-owned and franchised restaurants, information systems and related services used in restaurant operations, point-of-sale system, online and other technology-based ordering platforms, printing, and promotional items. The company was founded by John H. Schnatter in 1984 and is headquartered in Louisville, KY.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, New CCI Buy Signals, P&F Double Top Breakout and Moved Above Upper Keltner Channel.
PZZA is down -0.27% in after hours trading. This hasn't been a good performer, but it is coming back to life. Today saw a breakout above the 200-day EMA. The RSI is not overbought despite the lengthy rising trend. The PMO has triggered a new PMO Crossover BUY Signal above the zero line indicating new strength. Stochastics are now above 80. Relative strength has been okay for the group. It is picking up strength near-term. PZZA is showing outperformance coming in against both the group and the SPY. The stop is set below the 20-day EMA at 7.5% or $50.86.
The weekly PMO is what got me on this chart. It is rising strongly. I see it as new strength coming in given the strong move upward. It is below the zero line so that does take a little away from it. The weekly RSI is positive and not overbought. The StockCharts Technical Rank (SCTR) is far from the hot zone* but it is on the rise. Remember this is a reversal candidate and they carry slightly more risk. If it can get to the next level of resistance if will be an almost 19% gain.
*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.
Toll Brothers, Inc. (TOL)
EARNINGS: 2024-12-03 (AMC)
Toll Brothers, Inc. engages in the design, building, marketing, and arranging of financing for detached and attached homes in residential communities. It operates through the following geographical segments: North Region, Mid-Atlantic Region, South Region, Mountain Region, and Pacific Region. The company was founded by Robert I. Toll, and Bruce E. Toll in May 1967 and is headquartered in Fort Washington, PA.
Predefined Scans Triggered: P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
TOL is up +0.37% in after hours trading. We had a nice breakout and a mechanical pullback today. The decline took the RSI away from overbought territory, offering more upside. The PMO is nearing a Crossover BUY Signal, it has also been moving mostly sideways above the zero line which signifies pure strength. Stochastics are now above 80 and we can see the industry group is indeed beginning to outperform. Picking TOL was based on the highest PMO value among the choices today, but I could also go off relative strength to the group which shows incredible leadership from TOL. It is beginning to outperform the SPY. The stop is set beneath support at 7.3% or $145.30.
Price is making new all-time highs on this strong stock and it looks to go higher. The weekly RSI is not overbought and the weekly PMO is on a Crossover BUY Signal well above the zero line. The SCTR is well within the hot zone. Consider a 17% upside target to about $183.40.
Viavi Solutions Inc. (VIAV)
EARNINGS: 2024-10-31 (AMC)
Viavi Solutions, Inc. engages in the provision of network test, monitoring, and assurance solutions for communications service providers, enterprises, network equipment manufacturers, government and avionics. It operates through the following segments: Network Enablement, Service Enablement, and Optical Security and Performance. The Network Enablement segment offers an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks. The Service Enablement segment covers solutions and services primarily for communication service providers, and enterprises that deliver and/or operate broadband and IP networks (fixed and mobile) supporting voice, video, and data services as well as a wide range of applications. The Optical Security and Performance segment leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell products targeting anti-counterfeiting, consumer and industrial, government, healthcare, and other markets. The company was founded in 1979 and is headquartered in Chandler, AZ.
Predefined Scans Triggered: Elder Bar Turned Green.
VIAV is down -1.39% in after hours trading. Price is getting close to overhead resistance, but I liked the chart based on the steady rise in price and the recent Golden Cross of the 50/200-day EMAs. The RSI is getting a little overbought so a hesitation at resistance could occur. The PMO looks great with its very high value and flat appearance above the zero line. This is a sign of pure strength. Stochastics are angling down, but they did turn up today and they are very close 80. The group is really soaring based on relative strength and this one has participated. It is showing slight leadership among the group and it is outperforming the SPY currently. The stop is set beneath support at 7.3% or $8.64. It reports on Halloween.
This is a good rally off what appears to be all-time lows. The weekly RSI is positive and not overbought. The weekly PMO is back above the zero line and the SCTR has just entered the hot zone. There is some great upside potential on this one if it can reach the next level of resistance. That upside potential swayed me also to pick this stock, but remember it is a reversal candidate and has some extra risk associated with it.
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 55% long, 0% short. I'm considering TOL and VIAV. I already have exposure to Restaurants and Bars.
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